Luxury jewelry retailer Tiffany & Co. (NYSE: TIF) reported its fiscal 2016 first-quarter earnings and revenue that missed analysts’ estimates. Following the earnings report, the stock closed at $63.89 on Wednesday. Considering the downward-looking fiscal 2016 revenue guidance issued by the company and the overall decline in the high-end retail sales, we can expect the share price to remain bearish in the second quarter.
The New York-based company had warned in the fourth-quarter of 2015 that profits would decline in the first quarter of 2016. So, Wall Street had absolutely no positive expectations from the company.
The first-quarter revenue of $891.3 million came below the analysts’ expectation of $924.1 million. In the similar period last year, the company had reported revenues of $962.4 million.
Barring Japan, Tiffany did not fare well in any of the regions it operates. On a GAAP basis, the revenue declined 8% in America, 8% in Asia & Pacific, and 9% in Europe. The company’s revenue increased by 8% in Japan. On a constant currency basis, the gain in revenue is only 1% in Japan.
The comparable store sales in America declined by 10%. The Asia-Pacific region and Europe registered a much steeper decline of 15%. Japan was an exception with a 12% rise in the comparable store sales.
Similarly, the earnings for the first quarter were $87.5 million or $0.69 per share, down from $104.9 million or $0.81 per share in the first quarter of fiscal 2015. Excluding the tax benefit, Tiffany earned $0.64 per share in the first quarter. The consensus estimate of analysts is $0.68 per share.
The high-end retailer also issued discouraging second-quarter guidance. During the second quarter, the company expects a 15% decline in the earnings of $0.84 per share reported in the first quarter last year. This works out to be approximately $0.73 per share. The second-quarter earnings estimate of analysts is $0.79 per share.
For the fiscal year 2016, Tiffany anticipates about a 5% decline in the profit compared to last year. Wall Street estimates a 2% decrease (y-o-y basis) in the earnings to $3.75 per share. The company also trimmed its previous revenue guidance of $4.1 billion. Tiffany now believes that revenue would fall by a single-digit percentage from the $4.1 billion reported last year. The revenue estimate of analysts currently stands at $4.1 billion for fiscal 2016. Thus, considering these facts, a rebound in the share price is unlikely during the second quarter.
The stock is clearly moving within a descending channel. The next support for the stock is at 50. The RSI indicator, as the sub-chart reveals, is inclined downwards with a reading below 50.
Considering the bearishness, a binary options trader should pick up a one-touch put option contract to gain from the probable downtrend in the price. A target price of $55 or above is recommended for the trade. By choosing an expiry date in the last week of June, a trader can best position himself in the trade.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
