NEW YORK (TheStreet) -- Shares of Tiffany & Co. (TIF) may decline today after the upscale jeweler reported a profit forecast on Friday that was below estimates even though it projected net worldwide sales would increase by a high-single digit percentage in 2014. The company forecast a profit of $4.05 to $4.15 per share this fiscal year. Wall Street analysts projected $4.28 a share, according to Thomson Reuters I/B/E/S.
Tiffany reported a loss of $103.6 million, or 81 cents a share, in the fourth quarter, mostly the result of losing an arbitration ruling against Swatch Group (SWGAY). A year ago, it reported a profit of $179.6 million, or $1.40 a share. Worldwide net sales increased 5% to $1.3 billion
In the 12 months ended January 31, 2014, worldwide net sales increased 6% to $4.0 billion. On a constant-exchange-rate basis, worldwide net sales rose 10% and comparable store sales rose 6% due to growth in all regions. Net earnings were $181 million, or $1.41 per diluted share. Excluding the fourth quarter charge, as well as expenses of $9 million, or $0.04 per diluted share, that had been recorded in this year's first quarter for specific staff and occupancy reductions, net earnings increased 15% to $481 million, or $3.73 per diluted share, from $416 million, or $3.25 per diluted share, in the prior year.
Separately, Tfiffany announced today that its Board of Directors approved a new stock repurchase program. The previous program expired at the end of January 2014. Effective immediately, this new program authorizes the repurchase of up to $300 million of Tiffany's Common Stock through open market transactions. Purchases are discretionary and will be made from time to time based on market conditions and the company's liquidity needs. The program will expire on March 31, 2017.
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TheStreet Ratings team rates TIFFANY & CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate TIFFANY & CO (TIF) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 6.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.36, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for TIFFANY & CO is rather high; currently it is at 62.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.37% is above that of the industry average.
- Net operating cash flow has slightly increased to $85.05 million or 7.36% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.02%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 49.7% when compared to the same quarter one year prior, rising from $63.18 million to $94.61 million.
- You can view the full analysis from the report here: TIF Ratings Report