Early this morning, Tiffany & Co. (TIF) released its first-quarter earnings results. The company managed to match the consensus estimate for the quarter, logging earnings of 20 cents per share. While the results were in line with expectations, the were sharply lower than a year ago.
The same goes for quarterly revenue. On a year-over-year basis, revenue dropped nearly 22 percent to $523.1 million. Unlike earnings, revenue fell short of the consensus estimate of $533 million.
The company's CEO, Michael J. Kowalski, looked forward, stating "We are now almost one month into our second quarter and, although it's still too early to draw any conclusions, we are seeing a lessening in the rate of year-over-year total sales decline, as we expected. The rate of decline has improved slightly in the Americas and to a greater extent in other regions. Therefore, we reaffirm our previously-announced full year expectations (based on assumptions that may or may not prove valid) which continue to call for a worldwide sales decline of approximately 11 percent." The company then forecast earnings of $1.50 to $1.60 per share, surrounding the Street's expected $1.56.
First, I am not surprised the TIF's revenue dropped as much as it did - as jobs are lost and budgets tightened, we should see less spent on high-end retail. This (along with the earnings forecast) is why the company's loss thus far today is minimal although they forecast a worldwide sales decline of roughly 11%. People expect Tiffany's sales to slump, mainly because people aren't willing to spend $210 for a silver bracelet (seriously, a return to Tiffany & Co. heart pendant on a black cord costs $95!).
Let's see if the company can continue to wade its way through the current economic downturn. The problem is, I would expect luxury retailers to be among the last to recover.
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