Tiffany & Co`s share price has plummeted since its top in January 2015. The share price has dropped from over $100 to about $60. The main reason for that is the global softening demand for luxury goods.
The demand for jewelry has declined in the past few years, led y a strong U.S dollar, weakness in China and changing spending habits. Earnings at Tiffany has been falling for 4 consecutive quarters. The stock has been following the earnings.
Currency headwinds negatively impact both non-US sales and tourist spending in the United States. Early indications are these problems will persist throughout fiscal 2016. In its most recent analyst call, management guided minimal growth on a constant currency basis with earnings ranging from unchanged to a mid-single digit decline.
There are a number of bright spots for Tiffany
s. The companys effort to bolster its omnichannel platform and open new stores should bode well. On a constant currency basis, sales and comparable store sales increased across its international markets like Japan, Asia-Pacific and Europe.
The Estimize consensus is calling for earnings of 69 cents per share on $922,7 million in revenue, a penny higher than Wall Street on the bottom line but $2,5 million below on the top. Earnings per share estimates have dropped 13% in the past three months on negative sentiment heading into the Q1 report. Compared to a year earlier, this reflects a 15% decline in EPS with revenue projected to fall 4%.
The shares of Tiffany`s have dropped 25,5% over the past 52 weeks, but the majority of analysts maintain a «strong buy» on the underperformer, while the average 12-month price target of $81,29 stands at a 26% premium to current trading levels.
If Tiffany continue to struggle, analysts will continue to be negative on the stock.
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