The world’s second largest luxury jewelry retailer, Tiffany’s, reported their third quarter results before the opening bell, and tepid results had some worried about what this means for their holiday season. Earnings per share came in at $0.76, below the Estimize consensus of $0.82 and the Wall Street consensus of $0.78, yet increasing a modest 4% YoY. Revenues didn’t fair much better at $959.6M, lower than the Estimize consensus of $977M and the Street’s expectation of $970M, still growing 5% from Q3 2013. Both misses are partially due to weakness in Japan which implemented a consumption tax in April that has continued to eat away at consumer demand for Tiffany’s products. The bright spot in today’s report was same store sales which grew 4% globally and 11% in the Americas. This metric was enough to keep investors happy, with the stock opening 4% higher.

In the last week we’ve seen 14 retailers from the S&P 500 index report third quarter earnings. Of those, seven beat the Estimize consensus on earnings, while three met and four missed. On the revenue front, nine beat the Estimize consensus, while five missed. The only companies that saw profits decline year-over-year were Urban Outfitters (-26%), Staples (-12%) and GameStop (-2%). As of today, the consumer discretionary sector is the third strongest of all 10 S&P 500 sectors, with Q3 earnings growth of 13.3% and revenue growth of 4.1%. The strongest retail industry in the third quarter was the internet retailers, up 25.3%, but not far behind are the specialty retailers with 10.1%  and textiles, apparel and luxury goods at 11.1%. Despite lower than expected Consumer Confidence of 88.7 for November, this is still at a 7-year high, and expectations for the holiday shopping season remain positive. 

How Are We Doing?

Expectations for S&P 500 earnings growth for the third quarter stand at 11.6%. Revenues are anticipated to come in with 4.8% growth. All 10 sectors are anticipated to post positive YoY growth on both the earnings and revenue front.