¿Why does Tiffany´s fall so much?
Tiffany´s has lost 20% of its value in just three weeks in the middle of weak results and worst forecasts
Tiffany´s, the famous jewelry store chain, leads a terrible 2015. After many years of uninterrupted advances, the company finished 2014 above $110 per share, the highest ever. It has not even been a month now and their titles are around $90, 20% less than a few weeks ago. The punishment was so amazing that it has even triggered speculation that it could be the target of a takeover bid.
The main reason behind the decrease was the disappointing results obtained by the company during the Christmas season. Sales in the last two months of 2014 totaled $1.02 billion, 1% less than the same period a year earlier, while comparable sales (which do not take into account the ten stores opened in 2014) remained constant. Actually we cannot say that the results were very surprising abroad (bad Japan, regular Europe and well the rest of Asia, more or less than expected), but were disappointing in the United States, which accounts for 50% of total revenues, where revenues were down by 1%.
Tiffany´s also warned that profits in 2015 will be lower than the previously announced, an effect that has weighed in the investors sentiment, even considering that it means an advance of between 11 and 13 % over the previous year. The company has also admitted that will be affected by the strong US dollar, which will affect both sales abroad as the number of tourists visiting the United States in 2015.
Those expectations, together with the fact that the valuation of the company was at very high levels, have caused a strong seller flow that has wiped out a fifth of its market value, including its worst trading day in more than a decade. Until December 2014 the company accumulated 4 consecutive months with more downward revisions than upsides by analyst firms, a totally unknown trend for the company in its history.
Now, following the decline in the stock market, none of the 29 firms that analyze the value recommend to sell at current prices, although most still recommend keeping the value. That means that the stock is cheaper than before but it is still early to consider it as a bargain. Please, clic here to view the video.
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