It’s turning into Black Thursday for some retailers — black as in bad. Even as the broader market rises a fraction, shares of both Tiffany & Co. (TIF) and Kohl’s Corp. (KSS) were down more than 8% in early trades, while Gap Inc. (GAP), Macy’s Inc. (M) and Target Inc. (TGT) all saw early declines.
The reason is mostly sales data.�Tiffany disappointed on third-quarter earnings and outlook, while the other sliding retailers reported a fall in November same-store sales or, in the case of Gap, an increase below expectations. You can only blame Superstorm Sandy so much, seems to be the message from investors.
It’s not necessarily all bad news. Analyst Oliver Chen at Citi still likes Tiffany, calling it a “longer-term opportunity” and holding a Buy rating and target price of $82 a share — more than $20 higher than its current price. Looking into the latest earnings for reasons to be upbeat, Chen compiles the following list:
(1) Y-o-Y inventory growth in 3Q +10.9% vs. 2Q�s +21.4% and guiding to +10% at YE but still running above revenues likely due to COGS inflation; (2) theoretical COGS deflation benefit in 4Q/2013; (3) potential perception that new guidance is low enough; (4) greater part of EPS miss due to GM/taxes and revenues still growing on an overall GAAP basis; (5) management commentary that TIF continues to see improving results in this Holiday season on easing Y-o-Y comparisons and success of new stores, new product intros, and more product-focused marketing.
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