Will Tiffany Move Like Movado or Struggle Like Coach?

Tiffany (NYSE: TIF  ) will release its quarterly report on Tuesday, and investors are pleased that the stock has risen back toward its 2011 highs. But with luxury retailers Movado Group (NYSE: MOV  ) and Coach (NYSE: COH  ) having had different experiences recently in the high-end retail segment, Tiffany investors have to hope that the jewelry giant can survive troubled trends and keep advancing.

Tiffany is well-known for its high-end jewelry, with a strong reputation for decades having supported its global growth as the increasingly international nature of the retail business has encouraged expansion around the world. For years, luxury retail fared far better than mainstream retailers, as rich customers fared better during the recession than those of more modest means. But do Coach's recent mixed results point to an end of that trend, or can Tiffany follow Movado and other luxury retailers higher? Let's take an early look at what's been happening with Tiffany over the past quarter and what we're likely to see in its report.

Stats on Tiffany

Analyst EPS Estimate

$0.58

Change From Year-Ago EPS

18.4%

Revenue Estimate

$889.51 million

Change From Year-Ago Revenue

4.3%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

How brightly will Tiffany earnings shine this quarter?
Analysts have raised their views on Tiffany earnings in recent months, boosting estimates for the quarter ended in October by a penny per share and full-year fiscal 2014 projections by more than 2%. The stock hasn't done much lately, though, with essentially flat performance since late August.

Tiffany began the quarter on a reasonably solid note, with its previous-quarter report showing reasonable growth. Worldwide sales rose 4%, with a 5% jump in comparable-store sales coming from strength in most of the company's geographical regions. Net income jumped an even more impressive 16%, confirming that luxury customers appear to remain strong, especially in the Asia-Pacific region. Surprisingly, Europe was also a source of strength for Tiffany despite the continent's generally weak economy.

Yet some luxury retailers have faced challenges to their dominance. Coach also reported impressive sales growth in China that helped it keep its overall revenue up, but its stock has been weak over the past six months as investors have wanted to see more signs of future sales gains as well. Movado hasn't seen big drops, but it has fallen behind watch-retail rivals as high-end niche hasn't produced the expanding margins lately that it did in past years. For its part, Tiffany has generally bucked the trend and has kept its lead over Coach and fellow high-end retailer Michael Kors in sales per square foot, but it's too early for Tiffany to declare victory just yet.

In response to those challenges, Tiffany has taken steps to bolster its presence in the market. Improvements to its website should help it earn more e-commerce business, which has become an increasingly important aspect of retail growth industry-wide. Moreover, with the drop in prices of precious metals, Tiffany could see some margin expansion as high-end shoppers move toward higher-margin merchandise like diamond jewelry to preserve their wealth.

In the Tiffany earnings report, watch to see whether the jewelry retailer keeps seeing a tale of two markets, with sluggishness in the domestic market offsetting international growth. Eventually, Tiffany needs to see growth around the world if it wants to keep moving higher from here.

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