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Zacks Investment Research upgraded Tiffany & Company (TIF - Analyst Report) to a Zacks Rank #1 (Strong Buy) on Jul 12, 2014.

Why the Upgrade?

We believe Tiffany is well positioned to support sales and earnings growth in the long run by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. Moreover, with nearly half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective as well.

The company, which competes with Signet Jewelers Limited (SIG - Snapshot Report), holds a significant position in the world jewelry market due to its distinctive brand appeal. We believe that the company intends to expand its distribution network by adding stores in both new and existing markets.

The company is focused on opening smaller stores that offer selected collections of lower priced higher-margin products, which in turn boosts store productivity. Tiffany concentrates on improving sales per square foot through an increase in customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives.

Tiffany’s strong fundamentals and strategic approach led to impressive first-quarter 2014 results, wherein earnings of 97 cents a share beat the Zacks Consensus Estimate of 77 cents and the prior-year quarter earnings of 70 cents. Results benefited from higher sales and improved operating margin. Net sales of $1,012.1 million grew 13% from the prior-year quarter, and surpassed the Zacks Consensus Estimate of $953 million.

Following a robust first quarter, Tiffany raised its earnings expectations. The company now projects fiscal 2014 earnings between $4.15 and $4.25 per share against $4.05–$4.15 expected earlier. Management now projects total net sales growth in a high single-digit percentage for fiscal 2014 with growth expected across all regions.

Strong results and an upbeat guidance led to an uptrend in the Zacks Consensus Estimate, which increased 2.9% to $4.28 for fiscal 2014 and 2.1% to $4.85 for fiscal 2015 in the past 60 days.

Other Stocks to Consider

Other retail stocks that look promising include Columbia Sportswear Company (COLM - Snapshot Report) and Hanesbrands Inc. (HBI - Analyst Report), both with a Zacks Rank #1 (Strong Buy).

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