Tiffany's (NYSE:TIF) first quarter looked pretty good, but was it 19% good? In this episode of MarketFoolery, host Chris Hill and Motley Fool analyst Abi Malin take a closer look at the report and the trends around the company. Tiffany's increased focus on millennial consumers is starting to pay off, and the market is maybe, possibly, a tiny bit overeager about that today.

Then, find out more about Tiffany's massive buyback program, where online competition fits into the picture, and more. Also, shares of Lowe's (NYSE:LOW) are up a whopping 10% this morning on a pretty weak quarter. What gives? Then there's Target (NYSE:TGT), which is blaming the weather for some lame quarterly numbers. That may sound silly, but investors might want to give them the benefit of the doubt this time.

A full transcript follows the video.

This video was recorded on May 23, 2018.

Chris Hill: It's Wednesday, May 23rd. Welcome to MarketFoolery! I'm Chris Hill. Joining me in studio, Abi Malin in the house. Thanks for being here!

Abi Malin: Thanks for having me!

Hill: We're back on schedule. We had taped a couple of episodes to run Monday and Tuesday. We're talking news today. We have luxury retail, we have general retail. We're going to start with home improvement retail. Shares of Lowe's up 10% this morning despite the fact that, as pretty much everyone should have expected, same-store sales came in low. We had talked about this last week with Home Depot (NYSE:HD) and the weather in April really affecting Home Depot. No surprise that it affected Lowe's as well. Why is the stock up 10%?

Malin: Sales were up 3%, but like you said, comp sales were just about 0.6%, which is pretty low. They did cite that bad weather that they talked about. Part of this, I think, is their sales growth, which was up 20% and now represents about 5% of all sales. I also think that part of this is just the macroeconomic outlook for Lowe's. We have full employment still, income gains that are hoping to sustain this home improvement industry. Also, demand is still in excess of supply in the housing market. That's usually when you start to see a lot of housing improvements.

Hill: We also have a new CEO coming in.

Malin: New CEO.

Hill: It's always interesting when there's a big switch like this. In this case, for those who missed it, Robert Niblock has been the CEO at Lowe's for, I think, about 13 years. Marvin Ellison, who technically still is currently the CEO at J.C. Penney, but he's going to be moving over to Lowe's. And I have to believe that's at least a little bit of the enthusiasm with the stock today that we're seeing. Marvin Ellison has been at JCPenney for, I think, three years, maybe a little bit more than that.

Malin: Since 2014.

Hill: Prior to that, he spent a dozen years in the executive ranks at Home Depot. He clearly seems very excited about this opportunity. Again, I have to believe that's at least a little bit of the pop.

Malin: Yeah. I think having answers always helps. We knew that Niblock was leaving back in March. Now, we have an answer. I also think, speaking to Marvin Ellison's credibility, something he's focused on at JCPenney is that online omnichannel, ironing out the kinks there. I think we're going to see that increase in importance at Lowe's.

Hill: We talked about this with Home Depot. When you look at home improvement companies like this, a lot of times, the sales are delayed. So, the bad weather that we saw in April ...

Malin: Should catch up in later months.

Hill: I mean, I know that I didn't do any shopping at Home Depot in April just because the weather was so cold and rainy around here. So, those were definitely delayed.

Malin: They commented that 35% of sales in Q1 are historically driven by outdoor, and it's about 40% in the next quarter. That's something to watch going forward.

Hill: Let's move on to Target. Target's first quarter was not great. Profits came in lower than expected, overall sales at Target were down. Curiously, Target blamed the weather, too. Which, last time I checked, all of their stores are indoors. There was a little bit of blaming the weather. I sort of laughed at that when I saw that headline, and then, once I looked at it a little bit further, you know what? Target sells some of the "summertime" larger equipment.

Malin: Apparel sales are also affected by weather. As summer doesn't roll in as quickly, you don't need as many new clothes. And, I think a lot of Target's offering is that they have everything. You go in for one thing and end up leaving with 12. So, if you're not going in for your weather-related needs, that could hurt them.

Hill: The stock is down about 5% today. I want to come back to that in a second. When you look at what went right this quarter, again, the things that would be affected by weather, as you said, apparel. Brian Cornell, the CEO, also called out things like patio furniture and grills, and that sort of thing. Presumably -- I say "presumably" because Cornell used the word "delayed" in reference to these sales. So, presumably, these are going to get bumped to the current quarter, which, in theory, sets Target up for a pretty good second quarter report. I'm wondering if you look at that and think, "Well, if the stock is down 5%, maybe this is a buying opportunity."

Malin: I think Target is in a really strong position. I mean, this wasn't a great quarter for them, but I do think those store remodels, the growth in online, generally, I think they have a really refined business practice. They're one of the few that I actually admire in this space. I'm not too worried about Target going forward. If I was interested in taking a position ever, I think now would be an opportunity.

Hill: The stock, down 5% today. Shares of Target are up about 40% over the last year. Brian Cornell's first year on the job was tremendous. Had a little bit of a sophomore slump, but he really has that business humming right now.

Let's move on to the big surprise of the day, at least for me. You tell me if you were surprised by this, as well. It's Tiffany. Tiffany's first quarter profits came in higher than expected. They raised guidance for the full fiscal year. And shares of Tiffany are up 19% this morning. I mean, you can look at Lowe's putting up a fair-to-middling first quarter report and the stock popping 10%, and you can say that's the surprise of the day. In my book, it's this.

Malin: Yeah, I would have to agree with that. I think Lowe's, the performance was a little bit more tempered and expected. Tiffany's was just a surprise, it seems like, generally speaking. Worldwide net sales were up 15%. Comp sales were up 10%. This was really across all categories, so, Collections, Engagements and Designer. This is sort of a breath of fresh air for a brand that hasn't really had one in a while. I think it's encouraging and positive.

Hill: We talked briefly this morning. Did Tiffany have a plan for millennials? You were sort of joking that millennials are ruining everything -- I think most people know that -- and one of them is Tiffany and the diamond business, because apparently, millennials aren't buying diamonds. But it seems like they at least had a plan for that.

Malin: They brought in a new creative leadership under Reed Krakoff just over a year ago. He has really given people new hope, I think. In this past holiday season, he debuted a home and accessories line. It was, like, pure solid sterling staplers for the person who has everything at extremely high price points.

Hill: [laughs] I'm pretty sure we made fun of those on previous episodes.

Malin: We have, yeah. But, that line actually did really well. I think, at the start of May, they launched Paper Flowers, which is his first actual jewelry collection, which obviously should move the top line a lot more, considering that jewelry is about 90% of Tiffany's sales. So, I think it's a little bit of anticipation coming off of such a great launch in the holiday season that people, maybe, weren't expecting. I think it's a little optimistic, maybe, a little early to jump the gun on that one, but definitely worth watching, and maybe more interesting than it's been in a while.

Hill: So, underneath all of these headlines, Tiffany announced a stock buyback plan to the tune of $1 billion. This is not a big company. I mean, this is a very well-known brand, and we've talked before about how, despite the ups and downs that Tiffany has had as a business, the brand has always been strong, both the name brand and the the signature little blue box. It's a $15 billion company. Are you surprised that the stock buyback plan is that big? That they're doing stock buybacks really shouldn't be a surprise, given how often we've seen that in the last six months in the wake of the recent tax law that was passed. I'm just a little surprised that it's that high, coming at a time when the stock, today, is hitting an all-time high.

Malin: Yeah. I have a feeling that maybe management wasn't expecting this humongous jump today. That's probably both celebrated and a little bit of an eyeroll, maybe, over there. I think it just speaks to management's positive encouragement for the year going forward, and what they see coming down the pipeline. So, if anything, I think it's still something to be encouraged by, but perhaps something to watch, just given the price movement now.

Hill: We've talked before about online retail and your fondness for online retailers. Does what's going on with Tiffany have any ripple effect for an online jewelry retailer like Blue Nile? Or is that just a completely separate entity and there is no carry-over effect?

Malin: I think that's a really good question. I'd have to think more about it. My instinct would be, not exactly, or not directly, just given that Tiffany does have this brand name. Their stores are iconic, that blue box is part of the experience. I would think that they're perhaps one of the better-insulated brands in terms of online. Still, they only have about 314 stores across the entire world, so it's not huge. About 40% of those are in the Americas. So, I don't necessarily think that online is going to alter, given Tiffany's actions today.

Hill: Before we wrap up, I want to mention, next week is FoolFest. It's our annual two-day investing conference here at The Motley Fool. Also, next Monday is Memorial Day. This is all a little bit of a wind-up of me saying that next week is going to be a short week on MarketFoolery. We're not going to be doing the full four episodes, just two episodes, because FoolFest is next Thursday and Friday. You're going to be participating in FoolFest. Give me one sneak preview of coming attractions, what you're going to be talking about in terms of -- you're involved in at least one breakout session.

Malin: Yeah, I'm on a breakout and an opening panel on Friday.

Hill: Well, yes, that one I'm aware of, because I'm actually moderating that one. 

Malin: Oh, right, you're on that one, too.

Hill: [laughs] Do you remember that meeting we were in the other day?

Malin: I do remember that meeting.

Hill: What's the breakout session that you're going to be doing on?

Malin: Aaron Bush and I are doing three emerging trends from babies to boomers. We're talking about, maybe, some newer trends that we haven't necessarily looked at before at The Fool, and for each trend, we're giving two stocks that will benefit from said trend.

Hill: Nice. Will there be any discussion about how millennials are ruining everything?

Malin: Not directly, but it always comes up, given that we're both millennials and younger-looking.

Hill: Abi Malin, thanks for being here!

Malin: Thanks for having me!

Hill: As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you tomorrow!

Abi Malin has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. The Motley Fool has the following options: short September 2018 $180 calls on Home Depot and long January 2020 $110 calls on Home Depot. The Motley Fool recommends Home Depot. The Motley Fool has a disclosure policy.