Tiffany & Co. (NYSE:TIF) said reduced spending in its Americas stores contributed to a Q1 sales shortfall and lower store comps. Investors have push TIF stock down almost 4% this morning in pre-market activity.
Tiffany’s net sales were $899.6 million in the April quarter, compared with analysts’ expectations for $913 million, according to a company announcement. TIF net income increased to $92.9 million, or 74 cents per share, from $87.5 million, or 69 cents per share, a year earlier. The average forecast was 70 cents a share. In the U.S., comparable store sales declined 4%
“While these results modestly exceeded our near-term expectations, we are focused on executing long-term strategies to achieve stronger and sustainable performance through product introductions, optimization of our store base, effective marketing communications and the delivery of experiences that resonate with our customers, “Michael J. Kowalski, chairman and interim CEO, said in the statement.
Goldman Sachs analyst Lindsay Drucker Mann upgraded TIF stock May 12 to “buy” from “neutral” and raised its 12-month price target to $107 from $82 as a result of accelerating luxury sales and growing free cash flow. The investment bank based its opinion on data from a survey of 2,000 consumers, which shows the wealthy are more upbeat about the economy than less affluent individuals.
Tiffany did not open any company-operated stores in Q1 and closed three. The company said gross margin increased to 62.0% in the quarter from 61.2% a year ago, primarily reflecting a shift in sales mix toward higher-margin fashion jewelry products, partly offset by increased wholesale sales of diamonds.
Guidance for TIF earnings for FY17 calls for EPS increasing by a “high-single-digit percentage over 2016’s earnings per diluted share of $3.55 and by a mid-single-digit-percentage over 2016’s earnings per diluted share (excluding charges) of $3.75,” according to the announcement.
TIF stock gained 3.2% in the three months through yesterday’s close. Rival Signet Jewelers Ltd. (NYSE:SIG) is down more than 20% in that period.
