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Deutsche Ponders Whether Tiffany & Co.'s Q2 Results Will Clear The Low Bar Set By Guidance

Deutsche Ponders Whether Tiffany & Co.'s Q2 Results Will Clear The Low Bar Set By Guidance
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Key Takeaways From Tiffany's 4th Quarter Earnings (GuruFocus)

In May, Tiffany & Co. (NYSE: TIF) management forecast earnings to decline in the second quarter by the same rate with which they fell in the first quarter. Were management comments correct in being this negative on Q2, however?

Deutsche Bank's Take

Deutsche Bank's Francesca DiPasquantonio previewed Tiffany's Q2 earnings release scheduled for Thursday while agreeing, to an extent, with past management forecasts.

Although "Luxury goods companies' Q2 results have generally come in less bad than expected," DiPasquantonio continued her Neutral outlook on the company.

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The Deutsche Bank analyst agreed with Tiffany management and estimated a below-consensus Q2 EPS at $0.72 and comps at -7 percent. "We still believe TIF's Q2 sales are likely to reflect the soft consumer environment globally, with weak tourist shopping and cautious domestic spending," said DiPasquantonio.

Comparable Sales Estimates

In comparable store sales, the analyst projected the following for each region:

  • North America: -7 percent.
  • Asia: -9 percent.
  • Europe: -12 percent.
  • Japan: +2 percent.
  • Mainland China: "Positive."
  • Hong Kong: "Negative."

Additionally, the consequential sales deleverage and infrastructure investments were expected to deliver operating margin dilution, despite a better estimated gross margin according to DiPasquantonio.

Among earnings and comps to watch for, DiPasquantonio will also be awaiting a new CFO, expected to be announced the same time as earnings.

The analyst reiterated her Hold position and $73.00 price target.

At time of writing, Tiffany traded at $69.20, up 1.65 percent Tuesday.

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Latest Ratings for TIF

Mar 2018Credit SuisseInitiates Coverage OnOutperform
Mar 2018Loop CapitalInitiates Coverage OnHold
Dec 2017JP MorganInitiates Coverage OnNeutral

View More Analyst Ratings for TIF
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