Tiffany shares down after a big earnings miss

A shopper carries a Tiffany & Co. retail bag on Fifth Avenue in New York, May 30, 2019.

Victor J. Blue | Bloomberg | Getty Images

Tiffany shares fell more than 1% in premarket trading Thursday after the luxury jeweler reported earnings and revenue that fell short of analyst expectations.

Here’s what Tiffany reported compared with what analysts were expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share, adjusted: 65 cents vs. 85 cents expected
  • Revenue: $1.015 billion vs. $1.037 billion expected
  • Same store sales: unchanged vs. expected 1.4% gain

In the third quarter ended Oct. 31, Tiffany said net income decreased by 17% to $78 million, or 65 cents per share, from $95 million, or 77 cents per share, a year earlier. Analysts were expecting Tiffany to earn 85 cents per share in the quarter.

Revenue was unchanged at $1.015 billion from a year earlier, but lower than the $1.037 billion analysts were expecting. Same store sales were also unchanged from a year earlier, compared with the growth of 1.4% analysts were expecting. Excluding Hong Kong, where anti-government protests has disrupted commerce, Tiffany said  worldwide net sales and sales at stores open at least a year increased by 4% and 3%, respectively, from the prior year.

The earnings report came a week after French luxury giant LVMH reached a deal to acquire Tiffany for $16.2 billion, or $135 a share, in cash. The boards of both companies approved the deal and the transaction is expected to close in the middle of 2020, subject to approval from Tiffany’s shareholders and regulatory approvals.

In its second quarter, Tiffany reported earnings that topped analysts’ expectations, but its revenue fell as protests in Hong Kong disrupted sales and tourists spent less across the U.S.

Management said in the last earnings report that if the situation worsened in Hong Kong, its fourth largest market, full-year sales results could fall closer to the lower end of its forecast.

For its fiscal year ending Jan. 31, 2020, Tiffany was originally calling for net sales globally to increase by a low-single-digit percentage, and for net earnings per share to increase by a low-to-mid-single-digit percentage. However, after the luxury jeweler reached the deal with LVMH, it said in an SEC filing it would no longer be providing guidance and that its most updated projection would no longer be in effect.

Tiffany is also renovating its New York flagship store on Manhattan’s Fifth Avenue with an anticipated completion in the fourth quarter of 2021. The company said it expects to spend 1% to 2% of worldwide net sales each year on the project. The iconic flagship store accounts for as much as 10% of annual sales.

Tiffany had a market cap of $16 billion at Wednesday’s close.

Read the company’s full earnings release here.

-CNBC’s Holly Ellyatt and Lauren Thomas contributed to this report.

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