Tiffany Expects Q1 EPS Decline By 15%-20%

(RTTNews) - Tiffany & Co. (TIF) said it expects that earnings share for the first quarter may decline by 15-20%, followed by a 5-10% decline in the second quarter and a resumption of growth in the second half. Analysts polled by Thomson Reuters expect the company to report earnings of $0.76 per share for the first-quarter. Analysts' estimates typically exclude special items.

Frederic Cumenal, chief executive officer, said, "We are focused on returning to stronger financial performance, at sustainable rates, which we believe is achievable as we execute on our strategic initiatives and as challenging external conditions abate. Therefore, our longer-term objective calls for reaching high-single-digit net earnings growth, driven by mid-single-digit worldwide net sales growth on a constant-exchange-rate basis, while also continuing to generate strong free cash flow."

The company currently forecasts that full year earnings per diluted share in 2016 will range from unchanged to a mid-single-digit decline compared with 2015's $3.83 per share (excluding the loan impairment and staffing and occupancy charges.

This annual forecast is based on the following assumptions, which are approximate and may or may not prove valid: worldwide net sales on a constant-exchange-rate basis increasing by a low-single-digit percentage, but approximately equal to the prior year when translated into U.S. dollars; increasing worldwide gross retail square footage by 2%, net through 11 openings, 6 relocations and 9 closings; operating margin below the prior year's 19.7% (excluding the prior year's charges) due to an expected increase in gross margin but with SG&A expense growth (despite some benefit from lower pension costs) exceeding sales growth; interest and other expenses, net unchanged from 2015; an effective income tax rate slightly lower than the prior year; net inventories unchanged from the prior year; capital expenditures of $260 million; and free cash flow of at least $400 million.