Will Tiffany Shine During Its Second Quarter Results?

Tiffany & Co TIF will report its second quarter results on Wednesday before market open.

Tiffany reported its first quarter results on May 21. During the quarter the company earned $0.97 per share, topping analyst expectations by $0.20. Revenue rose 12.8 percent from a year ago to $1.01 billion and came in $54.95 million higher than analysts expected.

During the first quarter, Tiffany saw its comparable-store sales rise 11 percent due to strong growth in most regions. Gross margin improved to 58.2 percent from 56.2 percent a year ago due to favorable costs and price increases across all product categories and regions.

Tiffany did not issue second quarter guidance, but did project it will earn $4.15 to $4.25 per share for the entire fiscal year 2015.

Deutsche Bank: Cautious view on global luxury

Dave Weiner of Deutsche Bank is maintaining a cautious tone on the global luxury segment.

“Given the magnitude of the first quarter beat, investors are likely hoping for the second quarter to deliver in a similar fashion,” Weiner wrote in a note to clients on Monday. “While we believe management tried to set [the] fiscal year plan conservatively by taking into account trends in Europe and the consumption tax in Japan, that's balanced with our incremental caution about global luxury.”

According to Weiner, improvements to Tiffany's gross margins will depend on a potential mix shift to the higher margin Fashion Jewelery segment. In the first quarter, the segment saw its sales improve, a trend which Weiner will be observing closely.

In the first quarter, Tiffany saw its European comparable-sales decline by three percent. The company noted that the weakness was due to unfavorable currency exchange rates and the macro environment. While other luxury brands have experienced similar sales trends in Europe, Weiner notes that Ralph Lauren has seen encouraging trends in Europe.

Weiner is projecting Tiffany will earn $0.85 per share on $984 million in revenue during the second quarter.

Shares are Hold rated with a $100 price target.

Barrington: Not expecting guidance hike

Kristine Koerber of Barrington Research is expecting Tiffany to report a generally in-line quarter, but the analyst is focused on the holiday season.

“Management will introduce new product designs in September, with an emphasis on the fashion category,” Koerber wrote in a note to clients on Monday. “We are impressed with the company's recent new product launch, Tiffany T. Tiffany T reflects the company's move to elevate the brand and price points. We believe the fall product launch bodes well for the company ahead of the holiday season.”

In the near-term, Koerber isn't expecting Tiffany to raise its guidance, despite the new product launch. The analyst notes that management already raised guidance “substantially” following its first quarter results.

Koerber is projecting Tiffany will earn $0.85 per share on $984 million in revenue during the second quarter.

Shares are Market Perform rated with no assigned price target.

Stifel: Expecting downside

David Schick of Stifel is expecting Tiffany to report below Street estimates, given industry headwinds.

“We are slightly below Street but note low sales visibility in Japan (consumption tax-pull forward into first quarter) and generally some sluggishness showing up in luxury commentary warrants some near-term caution,” Schick wrote in a note to clients on Monday. The analyst emphasizes the fact that the company's gross margins of 37.3 percent in Japan is higher than the company's overall 23.2 percent so “any weaker sales in this market is worth noting.”

However, concerns over Tiffany heading into the quarter are short term in nature and are offset by a growing story over the company's new products, marketing, design and store operations.

Bottom line, Tiffany remains one of the best “bottoms-up” growth stories according to Schick.

Koerber is projecting Tiffany will earn $0.84 per share (no revenue estimates) during the second quarter.