Is Tiffany Losing its Bling?

[Stocks-to-Watch]

Tiffany (TIF) warned investors last month that the company’s sales growth faltered during the holidays. JP Morgan analyst Brian Tunick wrote in a note yesterday that the Street may still be overly optimistic about the luxury retailer’s fourth quarter results, which are scheduled to come out on March 20. He lowered his full-year EPS estimate to $3.80, below consensus expectations for $3.95.

“After posting comparable store sales increases of 17%, 23%, and 15% through the first three quarters of the year, holiday comps increased just 2% this year. Weakness that began with the Northeast region of the US could be spreading to other areas. We believe large drivers of the Northeast slowdown and broader impact were 1) the stock market (or “wealth effect” which has a 90% correlation to US comps) and 2) Wall Street bonuses (which the NY Comptroller estimates fell 30-40% this year) and layoffs.”

Tunick expects the company to post a comparable store sales decline in the first quarter.

“Given more difficult compares looming and high-end headwind (the first quarter will be the first time the SPX is down year over year since the second quarter of 2009), we now assume comps go negative beginning in the first quarter.”



Original Article Source by Barrons.com