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Friday July 25, 2014



Tiffany's Results Signal Improvement

Tiffany & Co. (TIF), a high-end jewelry retailer, reported its quarterly earnings on August 27, 2013. The company reported strong results and increased its guidance for the remainder of 2013.

The company reported revenue of $925.88 million for the quarter. This represents an increase of 4.4% from the comparable period last year when the company reported revenue of $886.57 million. The company increased forecasts for net earnings to between $3.50 and $3.60 per share for the remainder of 2013. This is an increase from the previous forecast of between $3.43 and $3.53 per share.

Tiffany's reported quarterly net income of $106.78 million or $0.83 per share, representing an increase of 16.3% from the same period last year. This beat analysts' estimates of $0.74 per share.

"We are pleased to have achieved healthy earnings growth in the first half of the year," said Michael J. Kowalski, Chairman and CEO of Tiffany's. "Looking forward, we are equally excited about the initiatives we are pursuing in product development, marketing communications and store expansion, all intended to further enhance Tiffany's strong brand position and take fuller advantage of its long-term growth opportunities in the global luxury market."

Tiffany's is currently enjoying increased demand for diamond jewelry in its Asia-Pacific stores, particularly China. Sales in the Asia-Pacific region climbed 20% during the quarter.

Tiffany & Co. (TIF) shares ended the week at $77.07, down 6.4% for the week.

Zales' Earnings Sparkle

Zale Corp. (ZLC), a jewelry retailer, reported its quarterly and fiscal 2013 earnings on August 28, 2013. The company reported earnings that impressed investors and caused Zale's stock price to increase.

The company reported revenue of $417.1 million for the quarter. This represents a 2.4% increase from the same period last year when the company reported revenue of $406.96 million.

Zales reported a net loss of $7.98 million for the quarter. This is an improvement from last year when the company reported a net loss of $19.75 million. However, Zales reported annual net income of $10.01 million.

"We are pleased to report another solid quarter with a 5.6% comp and significant improvement to margins. Importantly, for the year we achieved a significant milestone by delivering our highest net income in six years," commented CEO Teho Killion. "We intend to build on this momentum as we focus on driving profitable top-line growth and long-term shareholder value."

Zales is a turn-around story. After the financial crisis hit in 2008, the company's stock price dropped to a low of $0.97 per share in March of 2009. Many investors thought the company would file for bankruptcy. However, for the first time since 2008 Zales reported positive net income in fiscal year 2013.

Zales Corp. (ZLC) shares ended the week at $12.51, up 39% for the week.

William-Sonoma Delivers Mixed Results

William-Sonoma, Inc. (WSM), retailer of upscale home goods, reported its quarterly earnings on August 29, 2013. The results mostly beat Wall Street analysts' expectations with the exception of the company's gross margin for the quarter.

William-Sonoma reported quarterly revenue of $982 million, an increase of 12.3% over the comparable period last year when the company reported revenue of $874 million. Analysts had expected quarterly revenue to be $940 million.

The company reported net income of $48.9 million or $0.49 per share. This represents an increase from the same period last year when William-Sonoma reported net income of $43.4 million or $0.43 cents per share. Analysts' had expected earnings per share to be $0.47.

Laura Alber, President and CEO of William-Sonoma, commented on the company's quarterly results. "Longer term, we remain confident in our ability to continue to grow sales, maximize profitability and capture market share as we build on our successes across brands and geographies. We are looking forward to expanding our company-owned retail presence in Australia and entering a new market in the United Kingdom later this year. Additionally, in advancement of our global expansion objectives, we are excited about today's announcement of a multi-year franchise agreement with Store Specialists, Inc. as the franchisee for our brands in the Philippines."

William-Sonoma stores offer monthly cooking classes to the public for a fee. A list of classes by store location is available on their website. Those interested must register on the site to reserve a spot.

William-Sonoma, Inc. (WSM) shares ended the week at $56.40, down 4.3% for the week.

The Dow started the week at 15,015 and closed at 14,810. The S&P 500 started the week at 1,664 and closed at 1,633. The NASDAQ started the week at 3,662 and closed at 3,590.

A Bond World Tour

United States: In the United States, Treasuries fell for the fourth straight month on concerns that the Federal Reserve will begin tapering its bond purchases as soon as next month. The one factor exerting upward pressure on bond prices this week was the uncertainty over whether the United States will take military action against Syria. However, this pressure was not enough to halt the general trend toward lower prices. The 10-year Treasury note rose to 2.77% in early Friday trading.

Ireland: Irish bonds declined for the third consecutive week, pushing yields higher. The 10-year yield rose 0.18% this week to 4.18%.

Germany: German bunds rose this week, pushing yields down, as investors speculated whether the U.S. would pursue military action against Syria. Ten year bund yields fell to 1.86% on Friday.

Portugal: Portuguese bond prices fell this week, pushing yields to heights not seen in over a month. The Portuguese government must cut spending to meet the terms of its bailout loans from the European Union (EU) and the International Monetary Fund (IMF). As part of their cost saving measures the government passed a bill that enabled them to fire public sector workers who could not be retrained. This bill was supposed to save $170 million Euros. It was challenged in Portugal's constitutional court, which ruled on Thursday that the bill violates Portugal's constitution. This move surprised investors and sparked concern that the country will fail to meet deficit targets. Portugal's 10-year bond yield rose to 6.72% on Friday, August 30.

Italy/Spain: Bonds fell slightly in both Italy and Spain this week, pushing yields slightly higher. In Italy, the 10-year yield increased to 4.38% on Friday. This represents an increase of only five basis points (0.05%) this week. The 10-year Spanish bond yield reached 4.53% this week, representing a gain of seven basis points (0.07%) for the week.

Taiwan: Taiwan's 10-year yield rose this month the most in six years. The 10-year note rose 22 basis points (0.22%) this month to reach 1.72% on Thursday, August 29. Taiwan has been benefiting from the U.S. Federal Reserve holding interest rates at historically low levels. With the Fed considering a rise in rates, investors are seeking higher yielding assets.

The 10-year Treasury note yield finished the week at 2.75% while the 30-year Treasury note yield finished the week at 3.68%.

Taper Trepidation Affects Mortgage Rates

Freddie Mac released the results of its Primary Mortgage Market Survey on Thursday, August 29. The results show fixed mortgage rates falling on speculation that the Fed might delay its decision to taper bond purchases.

The 15-year fixed rate mortgage averaged 3.54% this week. This represents a decrease from last week when it averaged 3.6%. Last year at this time the 15-year fixed rate mortgage averaged 2.86%.

This week, the 30-year fixed rate mortgage averaged 4.51%. This is a decrease from last week when it averaged 4.58%. One year ago, the 30-year fixed rate mortgage averaged 3.59%

"The Fed is monitoring the housing market closely after the run up in mortgage rates over the past few months," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "The 13.4% drop in new home sales in July led financial markets to speculate whether the Fed might delay reducing its bond purchases and allowed long-term bond yields and fixed mortgage rates to decline over the week."

The money market fund finished this week at 0.4%. The 1-year CD finished at 0.6%.

Published August 30, 2013

Previous Articles

Struggles Continue for Barnes & Noble

Wal-Mart's Sales and EPS Disappoint

A Less Than Magical Quarter for Disney

Exxon's Earnings Miss Projections

Netflix's Earnings Don't Match Sky-High Expectations

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