CXWCapital's  Instablog

Tiffany (NYSE: TIF) will announce 3Q11 earnings on Nov 29, 2011. 3Q consensus EPS is $0.6, up 39.5% YoY. Our proprietary analysis suggests 3Q11 EPS is $0.71. Tiffany has a tracking record of beating consensus.

(Data Source: Company Data, Thomson ONE)

The Street expects 3Q revenue 799.55 million, up 17.28% YoY. Our current proprietary 3Q11 revenue estimate of TIF is 837.9 million.
 

3Q is historically a weak quarter for Jewelry sellers, with fewer shoppers entering retail stores. Orders of engagement rings usually peak in Q4. With deepening Euro zone debt crisis, we expect consumers in euro land are spending less than consumers in other regions. Particular, we see a positive QoQ growth in Asia-Pacific and Other regions.

We saw Blue Nile (NASDAQ: NILE), one of Tiffany’s biggest domestic competitors, posted disappointing 3Q results, price dropped more than 33%.  The company blames worldwide rising cost. We read this as a positive sign for Tiffany, since the missing orders partially went to Tiffany.Blue Nile also failed to transfer cost. In contrast, Tiffany is able to effectively transfer rising cost to customers, and thus exposes less on rising cost.

We believe Tiffany is able to maintain its margin at current level for a long time, as it is pushing hard to enhance its brand in emerging market. Tiffany just launched a websites earlier this week, dedicated to corporate sustainability. We view this annually updated websites as Tiffany’s effort to continuously maintain its margin.

We have long positions in TIF and may double the current positions within next 72 hours.

We have no positions in NILE and no plans to initiate positions on NILE within next 72 hours.