Shares of Tiffany & Co (NYSE:TIF) rose roughly 6.7% during pre-market trading session following the company’s better-than-expected first-quarter fiscal 2015 results. The quarterly earnings of 81 cents a share beat the Zacks Consensus Estimate of 69 cents. On the other hand, net sales of $962.4 million also surpassed the Zacks Consensus Estimate of $913.5 million.
However, what came as a drawback for this Zacks Rank #3 (Hold) stock was the year-over-year decline of 16.5% in earnings per share from 97 cents delivered in the year-ago quarter due to fall in sales and higher selling, general and administrative expenses. Net sales declined 5% due to sluggishness witnessed in Japan, partially offset by improved performance in other regions. Moreover, foreign currency headwind also adversely impacted the results.
In constant currencies, net sales inched up 1%, however, comparable-store sales (comps) fell 1%.
By geographic segments, sales in the Americas grew 1% to $444 million, while comps declined by an equivalent rate. Sales in the Asia-Pacific region edged down 1% to $259 million, and comps fell 2%. Japan sales plummeted 30% to $122 million and comps plunged 35%, and sales in Europe came in at $103 million, up 2% but comps declined by a similar rate. Other region sales tumbled 6% to $35 million, while comps decreased 8%.
In constant currencies, sales in the Americas jumped 3% and comps grew 1% during the quarter. Sales in the Asia-Pacific region grew 4%, while comps jumped 2%. Sales in Japan fell 18%, while comps decreased by 24%. Sales in Europe surged 21%, whereas comps increased 17%.
Gross margin expanded 90 basis points to 59.1% due to lower product cost and increase in prices. Operating margin contracted 300 basis points to 17.7%.
Store Update
During the quarter, Tiffany opened 3 company-operated outlets. As of Apr 30, 2015, the company operated 298 stores (123 in the Americas, 75 in Asia-Pacific, 56 in Japan, 38 in Europe, 5 in the U.A.E. and 1 in Russia).
Other Financial Details
Tiffany ended the quarter with cash and cash equivalents and short-term investments of $715.4 million, and total short-term and long-term debt of $1,079.2 million, reflecting 37% of shareholders equity. Capital expenditures of $37 million were incurred during the quarter.
Tiffany bought back 380,000 shares worth $33 million in the quarter. As of Apr 30, 2015, the company had $240 million at its disposal under the share repurchase authorization of $300 million that will expire in Mar 2017.
Guidance
Management continues to anticipate a minimum growth in earnings per share during fiscal 2015 over $4.20 earned in fiscal 2014. This includes a modest decline in the second quarter net earnings compared with the first quarter, while a double-digit percentage growth in net earnings during the remaining quarters.
Favorably Ranked Stocks
Better ranked stocks in the retail sector include Perry Ellis International Inc (NASDAQ:PERY), Columbia Sportswear Company (NASDAQ:COLM) and Oxford Industries Inc (NYSE:OXM). Perry Ellis sports a Zacks Rank #1 (Strong Buy) while Columbia Sportswear and Oxford Industries carry a Zacks Rank #2 (Buy).