Tiffany Q1 Profit Tops View, Sales Miss On Lower Comps; Backs FY17 Earnings View

(RTTNews) - Luxury jeweler and specialty retailer Tiffany & Co. (TIF) reported Wednesday higher profit in its first quarter, above market estimates. Net sales edged up, but missed market view amid lower comparable sales in all regions. Further, the company maintained its fiscal 2017 earnings view, but updated sales growth view on a constant exchange rate basis.

In pre-market activity on the NYSE, Tiffany shares were losing 3.92 percent to $89.49.

For the first quarter, the company reported net earnings of $92.9 million or $0.74 per share, higher than $87.5 million or $0.69 per share, a year ago.

On average, 19 analysts polled by Thomson Reuters expected earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude special items.

Gross margin increased to 62% from 61.2% a year ago, primarily reflecting favorable product input costs and a shift in sales mix toward higher margin fashion jewelry products. These were partly offset by increased wholesale sales of diamonds.

Earnings from operations as a percentage of net sales was 16.2% in the first quarter, compared with 15.1% a year ago.

Worldwide net sales rose 1% to $899.6 million from $891.3 million last year. The results reflected growth in Asia-Pacific and an increase in the wholesale sale of diamonds.

On a constant-exchange-rate basis, worldwide net sales increased 2%. Analysts were looking for sales of $913.44 million for the quarter.

Meanwhile, comparable store sales were 3% below the prior year.

On a regional basis, net sales in the Americas dropped 3 percent from last year to $392 million, and comparable store sales declined 4%, due to lower spending by both foreign tourists and local customers.

In the Asia-Pacific region, total sales of $257 million were 8% above the prior year, while comparable store sales declined 3%.

In Japan, total sales of $128 million were 2% below the prior year, and comparable store sales declined 1%.

In Europe, total sales declined 3% to $94 million and comparable store sales also declined 3%. On a constant-exchange-rate basis, total sales and comparable store sales rose 4% and 3%, respectively.

Michael Kowalski, Chairman of the Board and Interim Chief Executive Officer, said, "While these results modestly exceeded our near-term expectations, we are focused on executing long-term strategies to achieve stronger and sustainable performance...."

Looking ahead, for fiscal 2017, Tiffany continues to expect net earnings per share to increase by a high-single-digit percentage over last year's reported earnings, and by a mid-single-digit-percentage over last year's adjusted earnings per share.

The company still expects worldwide net sales on a reported basis increasing by a low-single-digit percentage. On a constant-exchange-rate basis, the company now expects worldwide net sales increasing by a low-single-digit percentage, compared to previous expectation of a mid-single-digit percentage increase.

Further, operating margin is still expected to be above the prior year entirely due to an expected increase in gross margin.

Analysts expect earnings of $3.97 per share on sales of $4.11 billion for the year.

In the year 2016, the company's reported net earnings were $3.55 per share, adjusted net earnings were $3.75 per share and worldwide net sales were $4.0 billion.