As we expected, Tiffany & Co just went through a terrible quarter.
- Earnings came in at $0.35 per share.This is being touted as “beating expectations” because Wall Street analysts had lowered their estimates all the way down to $0.25 per share. Demonstrating once again that earnings estimates are all but useless.
- The company’s top line came in at $618.2 million, a 1.4% year-over-year drop. That means it missed analyst estimes to revenues.
- They’ve lowered projections for the full-year, which will come to a close in January 2009. Tiffany now expects earnings to range from $2.30 to $2.50 per share, which is down from its prior guidance of $2.82 to $2.92 per share. That’s even lower than the analyst consenus, which called for $2.58 per share.
- Now they expect worldwide net sales to range from flat to a decline of approximately 2% compared with last year’s results. As late as this summer, Tiffany was expecting worldwide sales to grow 9%.
Back when we first projected a bad quarter for Tiffany, the shares were trading at $27. That already represented a 42% decline for the year. We thought they were headed even lower. What worried us the most was that Tiffany’s latest guidance had been predicated on two assumptions. First, they expected that worldwide sales would grow based on continued strong growth in Europe and Asia-Pacific. Second, they expected that growth in U.S. store sales in the fourth quarter would be strong. We had very different expectations.
How did we figure all this out? We walked into a jewelry store in October and found that prices were up and sales were off. “People are still buying wedding rings,” the girl behind the counter told us. “But they are holding off on optional jewelry.” Since pretty much all Tiffany jewelry is optional–no one needs to pay extra for a blue box–we were pretty certain the company was in for some trouble.
Earlier: Another Awful Month
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