Tiffany & Co. (TIF) Tops Q4 EPS by 5c; Comments on FY16 Outlook

Tiffany & Co. (NYSE: TIF) reported Q4 EPS of $1.46, $0.05 better than the analyst estimate of $1.41. Revenue for the quarter came in at $1.21 billion versus the consensus estimate of $1.22 billion.

On a constant-exchange-rate basis (see “Non-GAAP Measures”), worldwide net sales declined 2%, reflecting lower sales in the Americas and Asia-Pacific and sales growth in Japan and Europe and comparable store sales declined 5%. Reported in U.S. dollars, worldwide net sales of $1.2 billion were 6% lower than the prior year.

Guidance:

Management currently forecasts that full year earnings per diluted share in 2016 will range from unchanged to a mid-single-digit decline compared with 2015’s $3.83 per diluted share (excluding the loan impairment and staffing and occupancy charges - see “Non-GAAP Measures”). Based on sales trends in the current quarter-to-date and an assumption of gradual improvement over the course of the year, management expects that earnings per diluted share in the first quarter may decline by 15-20%, followed by a 5-10% decline in the second quarter and a resumption of growth in the second half. This annual forecast is based on the following assumptions, which are approximate and may or may not prove valid: (i) worldwide net sales on a constant-exchange-rate basis increasing by a low-single-digit percentage, but approximately equal to the prior year when translated into U.S. dollars; (ii) increasing worldwide gross retail square footage by 2%, net through 11 openings, 6 relocations and 9 closings; (iii) operating margin below the prior year’s 19.7% (excluding the prior year’s charges) due to an expected increase in gross margin but with SG&A expense growth (despite some benefit from lower pension costs) exceeding sales growth; (iv) interest and other expenses, net unchanged from 2015; (v) an effective income tax rate slightly lower than the prior year; (vi) net inventories unchanged from the prior year; (vii) capital expenditures of $260 million; and (viii) free cash flow of at least $400 million.

For earnings history and earnings-related data on Tiffany & Co. (TIF) click here.

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