Transaction between LVMH and Tiffany

Tiffany reported significantly better 3Q results than Wall Street expected, thanks to increased sales in the Asia region and some recovery in other markets.

On Tuesday, Tiffany (TIF) reported a strong third quarter, indicating a recovery in sales in the challenging environment of the COVID-19 pandemic.

Tiffany's earnings per share for the third quarter ended 31 October rose to $1.11, above the analysts average estimate of $0.75. Net income increased by 52% to $119 million from $78 million a year earlier. Excluding the $16.5 million merger costs with LVMH, Tiffany's profit increased by 73% to $136 million.

Quarterly earnings remained almost flat compared to last year at $1.008 billion, but exceeded the average analytical estimate of $980 million.

Tiffany's revenue growth was strongest in the Asia-Pacific region, where sales rose 30% to $382 million, driven by growth in mainland China and South Korea. In Japan, sales fell by 8% to $156 million.

However, the strong recovery in sales in Asia was offset by a 16% fall in sales in the Americas to $354 million and a 6% decline in Europe to $104 million.

E-commerce sales volumes in 3Q increased by 92% globally over the previous year, demonstrating positive results in all markets. As a result, total eCommerce sales accounted for 12% of total net sales from the beginning of the year to date, compared to 6% for each of the last three fiscal years.

Shares in Tiffany rose sharply at the end of October after Tiffany and LVMH completed litigation and agreed to a new deal whereby the French firm would buy back the American jewellery company at a slightly lower price of $15.8 billion, or $425 million discount.

However, according to the report, the total debt of Tiffany is $1.43 billion, of which $8888.00 million is long-term debt and $543.10 million is current debt payable within 1 year.

Tiffany shares have declined by 1.6% since the beginning of the year, but have increased by 7% over the last month.

The average target price for Tiffany shares among seven analysts is $127.38 (maximum $135, minimum $120), which represents a decrease of -3.17% compared to $131.51 at the close of trading on Tuesday.