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Bear of the Day

Tiffany & Co. (TIF) witnessed soft holiday sales numbers that prompted management to take a conservative stance on its future earnings. Results were at the lower end of management s expectations. It seems that the company is in an unfavorable position as the challenging economy is taking away some of the sheen from the high-end retailer.

On a constant-currency basis, total worldwide net sales for the two months period ended Dec 31, 2012, marked an increase of 4%, whereas comparable-store sales remained flat. We observe that the rate of growth of net sales and comps decelerated from 6% and 4%, respectively, registered during the two months period ended Dec. 31, 2011. Management now expects fiscal 2012 earnings to be at the lower end of the previously provided guidance range of $3.20 to $3.40 per share.

Tiffany had earlier trimmed its sales growth forecast to 5% to 6% for fiscal 2012, and hinted of contraction in operating margin. Consequently, we maintain our Underperform recommendation on the stock, until we see any catalyst triggering an upside.

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