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Tiffany & Co. (NYSE: TIF) reported its first quarter results this morning, matching analyst estimates with 20 cents per share on lower sales. This marks a 60% drop year over year compared with the 50 cents per share that it earned during its first quarter of 2008.
As I noted in our earnings preview yesterday, the luxury jewelry retailer is facing some tough times. Consumers have been cutting back on spending, and this is being felt by all retailers. Tiffany has been no exception.
Despite the recent slowdown in consumer spending, Tiffany has decided that it is not going to sacrifice its brand reputation by lowering costs, and as a result, overall sales have been suffering.
Worldwide net sales in the quarter were off by 18%, which is about what we were expecting. In March, the company's CEO stated that he was seeing sales off by about 20% worldwide, so this figure really does not surprise us too much.
As with any retailer, a key figure we need to look at is same store sales. Since this measures sales at stores open at least 12 months, it is a good indication of just how strong a business is doing, and for the quarter Tiffany had a pretty poor 21% decline in same store sales. Once again, this was not unexpected, as we already knew that consumers had been cutting back on luxury purchases during the quarter.
The company continues to remain cautious about the economic landscape, but at the same time is trying very hard to convince investors that it is positioning itself as strongly as possible to deal with the current market place. According to the company's CEO, Michael J. Kowalski, "Tiffany is, and is projected to remain, solidly profitable and will generate substantial cash from operations."
Kowalski went on to add that he is seeing business in America starting to stabilize, and that Tiffany is standing by its full year guidance at this time. He expects that full year earnings will fall somewhere in the range of $1.50 to $1.60 per share.
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Reader Comments (Page 1 of 1)
5-29-2009 @ 9:47AM
Jan said...
It is difficult to understand what people do with their money. Instead of trying to help the world, the rich lavish themselves with jewels. I don't think I could wear an emerald necklace in public and walk among people who are hurting inside because of their circumstances. If they can afford this, they can afford more taxes.
5-29-2009 @ 10:25AM
Lara said...
Tiffany's marketing strategy has worked marvelously for many years, but it will falter now. People have come to realize, in this new economic era, that Tiffany jewelry is priced about double what it's worth. Folks are no longer willing to pay the price. Tiffany, good luck hanging on to the illusion of what you are/aren't in the future!
5-29-2009 @ 12:14PM
ADMR said...
Tiffany & Co has some Serious BLING!
5-29-2009 @ 2:44PM
David said...
Jan I agree 100% . I don't get it ?
5-29-2009 @ 5:21PM
Lisa said...
Jan, I can understand your compassion for wanting to help out others'. However, why, just because someone has money to shop at Tiffany's or anywhere else and, "lavish themselves with jewels" are they obligated to help the poor? There are many whom are poor by the choices they've made. With your logic of thinking, then you should forgo your computer, Internet connection, house/apartment whatever that you are living in, and give it to the needy. Do you drive a car? Well, sell it and take the bus. Better, yet walk give your bus fair to the needy. I am not unsympathtic to the plight of the less fortunate, however, it isn't the obligation of the weathy to give everything away either. And, exactly how many charities give 100% or even close to that to those it is intended for? Until all salaries and expenses are paid those who are in need of it get pennies on the dollar. If someone is wealthy enough to shop at Tiffany's or anywhere else, and choose to lavish themselves with jewels, cars, houses, boats etc. then it's their money. It isn't their obligation to save the world. It's a nice thought if the world worked like that. However, how many people are scammed for money. how many of the "needy" aren't as needy as one might think. But rather, are amking all the worng choices and thus are poor by choice? u
5-29-2009 @ 5:36PM
Jane said...
Tiffany & Co. are just an overpriced crap hole. The quality is definitely not better than items from the diamond district in Manhattan and Tiffany's prices are just ridiculous. You are paying for the name and you are stupid if you do.
5-29-2009 @ 6:11PM
socbears66 said...
Lisa honestly the items that Tiffany's sells are so far down my list of things of value . They are not even on my radar . I am 61 years old and single and the thing of values change as we age . I am healthy so I am rich today . Mind you I want Tiffannys to survive . I just don't get it anymore . I guess there is a different wrech for every nut....
5-29-2009 @ 8:10PM
agt4085 said...
They are all out of their minds. Went looking at furniture today. Carson's wants 12000 dollars reg price for an armoire. It cost more to make 1 piece of furniture then a car. Who actually believes this crap. Want to fix them all. By nothing but resale. The biggest rip off is cable or dish. They make us pay for channels we don't even want. Hard to believe only 15 years ago everyone lived happy lives. WITHOUT cable , computers, cell phones and 60000 dollar cars.