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Earnings Preview: Tiffany & Co.

The jeweler Tiffany & Co. reports earnings for its third quarter on Wednesday before the market opens. The following is a summary of key developments and analyst opinion related to the period.
/ Source: The Associated Press

The jeweler Tiffany & Co. reports earnings for its third quarter on Wednesday before the market opens. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Tiffany has seen sales improve in the past several months, following steep sales declines in past quarters as consumers scaled back on discretionary purchases during the recession.

During the second quarter, revenue dropped 16 percent to $612.5 million, but that still topped Wall Street expectations and was a smaller drop than the 22 percent and 20 percent drops in the previous two quarters, respectively.

Following these results in August, Tiffany raised its full-year earnings forecast.

Executives said sales of merchandise at the highest prices were weak, but products offered at more accessible prices were stronger.

Fashion gold and silver jewelry were the best performers, and engagement jewelry declined about in line with total company sales, Tiffany said.

BY THE NUMBERS: Analysts polled by Thomson Reuters expect earnings of 23 cents a share on revenue of $573.8 million.

ANALYST TAKE: Stifel Nicolaus analyst David A. Schick pointed to a recent improvement in luxury car sales and said this bodes well for Tiffany.

"We believe this luxury car data is an important indicator for luxury goods demand," Schick wrote in a note to investors.

He said Tiffany's U.S. sales at stores open more than one year may improve to a 9 percent decline from a 24 percent drop in the second quarter.

Schick has a "Hold" rating on the stock.

WHAT'S AHEAD: All eyes now are on the holiday season, a popular time for gifts and engagements, when Tiffany records a large portion of sales. Analysts are also looking to see how well the company's flagship store performs, as the location is a popular tourist destination.

STOCK PERFORMANCE: Shares rose 51.9 percent during the quarter and are up 74.8 percent so far this year.