Traders Sell Tiffany Shares After Outlook, Lululemon Satisfies Shareholders

Quite a divergence today in retail – Tiffany & Co (NYSE:TIF) is taking a big hit today as the “teflon” high end consumer seems to be slowing.

  • In a warning sign that the outperforming luxury sector may be slowing down, Tiffany & Co. on Tuesday cut its full-year profit outlook after holiday season sales of fine jewelry slowed “markedly” in the U.S. and Europe.
  • Tiffany cut its adjusted profit outlook in the year ending Jan. 31 to a range of $3.60 to $3.65 from a previous guidance of as much as $3.80 that it gave in November.
Meanwhile, lululemon (NASDAQ:LULU) which a few weeks ago was in very bad shape, has been one of the best performers of 2012.  Today it continues that trend as it raised guidance for the quarter.
  • Lululemon raised its fiscal fourth-quarter earnings and revenue outlooks Tuesday, citing its better-than-expected revenue from the sale of its athletic gear.    The company said that it now expects earnings between 47 cents and 49 cents per share for the period ending Jan. 29. Its prior forecast was for earnings in a range of 40 cents to 42 cents per share. Lululemon boosted its revenue guidance to a range of $358 million to $363 million, up from $327 million to $332 million.
  • Analysts surveyed by FactSet expect quarterly earnings of only 42 cents per share on revenue of $334.2 million.
  • Lululemon said that it expects a low-to-mid twenties percentage increase in revenue at stores open at least a year, on a constant dollar basis. Its prior forecast called for a low to mid-teens percentage increase.

An interesting dichotomy of sorts, although Tiffany (NYSE:TIF) of course caters to a much higher end of consumer.

As for the broader market it continues to be the global growth names leading the way along with things such as regional banks.  I continue to marvel that we are now bidding up global growth names on bad news out of China, due to nothing more than hopes that this bad news means more easing.  Meanwhile a bevy of multinational companies (Siemens, Philips, GE, etc) have said not so positive things in the past 24 hours – but no one cares; indeed they are buying other such multinationals.  George Costanza lives.

Disclosure Notice

Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). Trader Mark also authors the blog Market Montage.

Further Reading: Analysts Say Fortunes Falling at Tiffany’s>>

 

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