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03/22/2019

Tiffany posts mixed Q4 results; CEO upbeat

Tiffany & Co. reported mixed results for its fourth quarter as profit topped the Street estimates but revenue fell short amid “external challenges and uncertainties” that included lower tourist spending.

Net income for the quarter ended Jan. 31 rose to $204.5 million, or $1.67 a share, from $61.9 million, or 50 cents a share, in the year-ago period, which included tax-reform-related adjustments. Analysts had expected earnings per share of $1.60.

Net sales fell 1% to $1.32 billion, missing estimates of $1.33 billion. Total same-store sales fell 1.0%.

Among regions, same-store sales were flat in the Americas and were down 3% in Asia-Pacific. Same-store sales dropped 5% in Europe which the company credited to a tourist decline. Same-store sales increased 3% in Japan.

For fiscal 2019, the retailer expects net sales to increase by a low-single-digit percentage, with net earnings declining during the first half of the year, due to “sales pressures” from lower tourism spending. On the company’s quarterly earnings call with investors, CEO Alessandro Bogliolo emphasized Tiffany’s “vast global growth opportunities” and that the company looks forward to “realizing full potential in the future.”

“A lot is going to happen in 2019,” Bogliolo said. “Our strategy is to renew our product offerings at a faster pace.” He added that the company also will continue to open stores in key cities.

In comments, analyst Neil Saunders said it is crucial that Tiffany continues to add new domestic shoppers to offset the reduced demand from existing customer segments.

“Fortunately, it has the scope to do this,” said Saunders, managing director, GlobalData Retail. “Our consumer tracking data show that brand recognition and affinity continue to increase among younger consumers aged 35 and under. While there is further to go in converting this group to buyers, we believe Tiffany has significant potential to expand its reach, largely thanks to the refresh of its brand image.” For more commentary, click here.