Tiffany & Co. :TIF-US: Earnings Analysis: Q4, 2017 By the Numbers : March 22, 2017

Tiffany & Co. reports financial results for the quarter ended January 31, 2017.

We analyze the earnings along side the following peers of Tiffany & Co. – Signet Jewelers Limited, Luxottica Group S.p.A. Sponsored ADR and Charles & Colvard, Ltd. (SIG-US, LUX-US and CTHR-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 1,229.60 million, Net Earnings of USD 157.80 million.
  • Gross margins widened from 63.02% to 64.50% compared to the same period last year, operating (EBITDA) margins now 25.45% from 28.92%.
  • Year-on-year change in operating cash flow of -22.69% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-01-31 2016-10-31 2016-07-31 2016-04-30 2016-01-31
Relevant Numbers (Quarterly)
Revenues (mil) 1229.6 949.3 931.6 891.3 1213.6
Revenue Growth (%YOY) 1.32 1.18 -5.95 -7.39 -5.58
Earnings (mil) 157.8 95.1 105.7 87.5 163.2
Earnings Growth (%YOY) -3.31 4.51 0.76 -16.59 -16.81
Net Margin (%) 12.83 10.02 11.35 9.82 13.45
EPS 1.26 0.76 0.84 0.69 1.28
Return on Equity (%) 21.2 13 14.36 11.89 22.51
Return on Assets (%) 12.33 7.43 8.25 6.81 12.68

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Market Share Versus Profits

Revenues History
Earnings History

TIF-US‘s change in revenue this period compared to the same period last year of 1.32% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TIF-US is holding onto its market share. Also, for comparison purposes, revenues changed by 29.53% and earnings by 65.93% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from 28.92% to 25.45%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from 63.02% to 64.50%. For comparison, gross margins were 61.51% and EBITDA margins 22.29% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

TIF-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 215.15, compared to last year’s level of 212.01 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

TIF-US‘s change in operating cash flow of -22.69% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 24.56% to 21.26% and (2) one-time items that contributed to a decrease in pretax margins from 20.50% to 20.05%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Tiffany & Co. is a holding company, which through its subsidiaries engages in jewelry merchandise. The firm also sells timepieces, leather goods, sterling silverware, china, crystal, stationery, fragrances and accessories. It operates through the following geographical segments: Americas, Asia-Pacific, Japan, Europe, and Other. The company is headquartered in New York, NY.

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