Bernstein Slashes Tiffany Price Target From $101 To $83, Remains Confident In Long-Term Brand Potential

• Tiffany & Co. TIF shares have declined 34.26 percent over the past six months, falling to a low of $61.80 on January 20.
• Bernstein’s Anne-Charlotte Windal has maintained an Outperform rating on the company, while lowering the price target from $101 to $83.
• Despite the disappointing holiday sales and lack of short term catalysts, Windal remains confident of the company’s current assortment strategy and long term brand potential.

Analyst Anne-Charlotte Windal explained that despite the low expectations for the quarter, Tiffany reported a disappointing negative 5 percent constant currency global comp decline with a 3 percent currency net sales decline for November-December 2015.

Although the constant currency comps for the Asia-Pacific, Europe and Japan were below consensus, the largest disappointment was the negative 8 percent comp for the Americas.

According to the Bernstein report, the magnitude of the “sequential deceleration in the Americas comp surprised to the downside,” with Holiday 2015 Americas comp decelerating by 14 percentage points.

The weakness in the Americas comp is a cause for concern, especially “in the context of what appears to be ongoing solid performance of luxury jewelry in the U.S.,” Windal stated.

The weakness also came “against a relatively easy compare” of -1 percent comp during the Holiday 2014 period, “which the company had attributed to early headwinds from the strong USD, combined with product and marketing mix issues,” the report noted.

The Americas comp implies low to mid-single digit negative comp for the domestic consumer business in the U.S., given that the country represents about 90 percent of the Americas sales volume.