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Tiffany (TIF) to Post Q1 Earnings: Disappointment in Store?

Zacks Equity Research

Tiffany & Co. TIF is scheduled to release first-quarter fiscal 2019 results on Jun 4. The renowned jewelry retailer’s earnings came in line with the Zacks Consensus Estimate in the last reported quarter, while it has outperformed the same by average of 13.5% in the trailing four quarters. Let’s see what’s in store for the company this time around.

Tiffany & Co. Price and EPS Surprise



Tiffany & Co. Price and EPS Surprise

Tiffany & Co. price-eps-surprise | Tiffany & Co. Quote

What to Expect?

The Zacks Consensus Estimate for earnings in the first quarter has remained stable in the past 30 days at $1.01 compared with $1.14 reported in the year-ago quarter. The consensus mark for revenues is $1,019 million, implying a decline of 1.4% from the year-ago quarter’s reported figure.

Factors to Note

Tiffany is likely to benefit from its brand enhancement endeavors, focus on omnichannel development and efforts to strengthen position in key markets. To this end, the company is committed toward elevating in-store experience and replenishing product portfolio. Focus on renewing product portfolio is evident from the launch of PAPER FLOWERS, which comprises a solid collection in diamonds and platinum, and the introduction of TIFFANY TRUE, an innovative engagement ring design. The company is also looking at other revenue generating avenues, which include expansion of its watch business.

Further, with about half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective. However, international presence exposes it to foreign currency headwinds, which are expected to be an obstacle in the upcoming release.

Markedly, management earlier guided that Tiffany is likely to witness roadblocks in the first half of fiscal 2019, stemming from tough year-over-year sales comparisons and increased investments. The company projected first-half earnings to decline on account of sales-related challenges owing to soft tourist spending, anticipated currency headwinds and tough year-over-year comparisons. Also, increased expenses related to certain investments are anticipated to weigh on the company’s first-half performance. Clearly, these factors pose concerns for the quarter to be reported.

Additionally, Tiffany has been incurring high SG&A expenses for quite some time now. Increased marketing spending, and high expenditure in technology, visual merchandising, digital and store presentations may keep margins under pressure in the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t show a beat for Tiffanythis earnings season. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Tiffany carries a Zacks Rank #3, it has an Earnings ESP of -6.25%, which makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

American Eagle AEO has an Earnings ESP of +0.47% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

CarMax KMX has an Earnings ESP of +2.80% and a Zacks Rank #3.

Lovesac Company LOVE has an Earnings ESP of +11.58% and a Zacks Rank #3.

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