Tiffany & Co. Earnings: Increasing Costs Tighten Margins as Net Income Falls

S&P 500 (NYSE:SPY) component Tiffany & Co. (NYSE:TIF) reported its results for the fourth quarter. Tiffany & Co. is a jeweler and specialty retailer that sells timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories.

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Tiffany Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the jewelry store fell to $178.4 million ($1.39 per share) vs. $181.2 million ($1.41 per share) a year earlier. This is a decline of 1.6% from the year-earlier quarter.

Revenue: Rose 7.8% to $1.19 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Tiffany & Co. fell short of the mean analyst estimate of $1.41 per share. Analysts were expecting revenue of $1.19 billion.

Quoting Management: Michael J. Kowalski, chairman and chief executive officer, said, “Tiffany exceeded the goals that we had set at the start of 2011 for both sales and earnings growth, although we concluded the year with softer-than-expected results. Nonetheless, we remain focused on successfully executing our long-term strategies and pursuing Tiffany’s substantial global growth potential in 2012 and beyond.”

Key Stats:

Last quarter’s profit decreases breaks a four-quarter run of profit increases. In the third quarter, net income rose 62.8% from the year earlier, while the figure increased 33.1% in the second quarter, 25.8% in the first quarter and 29.1% in the fourth quarter of the last fiscal year.

Gross margin shrank 0.6 percentage point to 60.4%. The contraction appeared to be driven by increased costs, which rose 9.4% from the year earlier quarter while revenue rose 7.8%.

Revenue has risen for the last four quarters. Revenue increased 20.5% to $821.8 million in the third quarter. The figure rose 30.5% in the second quarter from the year earlier and climbed 20.1% in the first quarter from the year-ago quarter.

After beating analyst estimates for the two previous quarters, the company fell short of forecasts. In the third quarter, it topped the mark by 10 cents, and in the second quarter, it was ahead by 16 cents.

Looking Forward: Over the past ninety days, the average estimate for the first quarter of the next fiscal year has fallen from 76 cents per share to 69 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. At $3.63 per share, the average estimate for the fiscal year has fallen from $3.76 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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