Post Earnings Coverage as Tiffany’s Revenue and Earnings Surpassed Market Estimates

Upcoming AWS Coverage on Signet Jewelers Post-Earnings Results

LONDON, UK / ACCESSWIRE / March 29, 2017 / Active Wall St. announces its post-earnings coverage on Tiffany & Co. (NYSE: TIF). The Company disclosed its fourth quarter and fiscal 2016 financial results on March 17, 2017. This designer and retailer of fine jewelry reported a 1% increase in worldwide sales and also provided outlook for FY17. Register with us now for your free membership at:

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One of Tiffany’s competitors within the Jewelry Stores space, Signet Jewelers Ltd (NYSE: SIG), reported on March 09, 2017, its results for the 13 weeks (“Q4 FY17”) and 52 weeks (“FY17”) ended January 28, 2017. AWS will be initiating a research report on Signet Jewelers in the coming days.

Today, AWS is promoting its earnings coverage on TIF; touching on SIG. Get our free coverage by signing up to:

http://www.activewallst.com/register/

Earnings Reviewed

For the three months ended January 31, 2017, Tiffany’s worldwide net sales increased 1% to $1.23 billion, while comparable store sales remained unchanged from the prior year. On a constant-exchange-rate basis, worldwide net sales rose 2%. The Company’s revenue numbers exceeded analysts’ consensus of $1.22 billion. For FY16, Tiffany’s worldwide net sales were $4.0 billion down 3% on a y-o-y basis, reflecting a 5% decline in comparable store sales.

Tiffany’s gross margins in Q4 FY16 totaled 64.1% compared to 63.0% in Q4 FY15 while in the full year gross margin was 62.2% versus 60.7% in the prior year. The higher margins were due to favorable product input costs and price increases taken in the prior year as well as favorable changes in product sales mix.

For Q4 FY16, Tiffany reported net earnings of $158 million, or $1.26 per diluted share, compared with $163 million, or $1.28 per diluted share, in the prior year. Net earnings included charges in the current year totaling $0.19 per diluted share for the impairment of capitalized software development costs and the impairment of loans to diamond mining companies. On an adjusted basis, the Company reported net earnings of $182 million, or $1.45 per diluted share, compared to net earnings of $187 million, or $1.46 per diluted share, in the year ago same period. Tiffany’s earnings numbers surpassed market expectations of $1.37 per share.

For FY16, Tiffany’s net earnings were $446 million, or $3.55 per diluted share, compared with the prior year’s $464 million, or $3.59 per diluted share. On an adjusted basis, the Company reported net earnings of $470 million, or $3.75 per diluted share, lower than the prior year’s $494 million, or $3.83 per diluted share.

Sales Details

In the Americas, total sales declined 5% to $1.8 billion in FY16 and 3% in Q4 FY16 to $587 million, and comparable store sales declined 6% and 2%, respectively. Sales in Tiffany’s New York flagship store declined 11% in the full year and 7% in the reported quarter, and represented less than 10% of worldwide net sales in both periods.

In Asia/Pacific region, total sales of $1 billion in FY16 were approximately equal to the prior year, and total sales of $284 million in Q4 FY16 grew 9% on a y-o-y basis, benefitting from the opening of new stores. Comparable store sales declined 9% and 2%, respectively. During the year, management attributed performance in this region to increased purchasing by local customers and declines in spending by foreign tourists. In addition, there was strong retail sales growth in China, increased wholesale sales in Korea, a decelerating rate of retail sales decline in Hong Kong, and varying performance in other countries.

For Q4 FY16 and FY16, Tiffany’s total sales in Japan, rose 15% to $185 million and 12% to $604 million in the full year, comparable store sales increased 19% and 16%, respectively. Management attributed sales growth in both periods to higher spending by local customers, with declines in spending by Chinese tourists.

In Europe, total sales were $146 million in Q4 FY16 and $458 million in the full year, down 7% and 10%, respectively, which was below the prior year. Comparable store sales declined 9% and 14%, respectively. The Company attributed results throughout the year to lower spending by local customers and foreign tourists across continental Europe.

Tiffany recorded Other sales of $99 million in FY16 and $28 million in Q4 FY16, down 8% and 12%, respectively. Comparable store sales declined 15% in the full year and 3% in the reported quarter, due to lower retail sales in the United Arab Emirates (“UAE”).

Store Update

In FY16, Tiffany opened 11 Company-operated stores and closed five locations. These, coupled with relocations of five stores, resulted in a net increase in gross retail square footage of approximately 3%. At January 31, 2017, the Company operated 313 stores (125 in the Americas, 85 in Asia/Pacific, 55 in Japan, 43 in Europe, and 5 in UAE) compared to 307 stores in the year ago same period (124 in the Americas, 81 in Asia/Pacific, 56 in Japan, 41 in Europe, and 5 in the UAE).

Cash Flow & Balance Sheet

During FY16, Tiffany generated $702 million of cash flow from operating activities and $479 million of free cash flow. The Company’s cash and cash equivalents and short-term investments increased to $986 million at January 31, 2017, from $887 million at the prior year-end. Total debt (short-term and long-term) as a percentage of stockholders’ equity was 37% at both January 31, 2017 and 2016. Tiffany’s net inventories at January 31, 2017, were 3% lower than at the prior year-end.

Tiffany spent $184 million in the full year to repurchase 2.8 million shares of its Common Stock at an average total cost of $65 per share, which included spending $3 million in Q4 FY16 to repurchase approximately 39,000 shares at an average total cost of $73 per share. At January 31, 2017, $310 million remained available for repurchases under a program that authorizes the repurchase of up to $500 million of the Company’s Common Stock which expires on January 31, 2019.

Fiscal 2017 Outlook

For the fiscal year ending January 31, 2018, Tiffany is expecting worldwide net sales to increase over the prior year by a low-single-digit percentage and by a mid-single-digit percentage on a constant-exchange-rate basis and net earnings per diluted share increasing by a high-single-digit percentage over 2016’s earnings per diluted share. The Company is also forecasting net cash provided by operating activities of approximately $700 million and free cash flow of approximately $450 million for FY17.

Stock Performance

On Tuesday, March 28, 2017, the stock closed the trading session at $96.05, climbing 1.03% from its previous closing price of $95.07. A total volume of 1.55 million shares have exchanged hands. Tiffany’s stock price surged 25.15% in the last three months, 36.05% in the past six months, and 36.96% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have rallied 24.67%. The stock is trading at a PE ratio of 26.97 and has a dividend yield of 1.87%.

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