Earnings season shows some suprises

Tiffany (TIF), whose name has been synonymous with luxury since 1837, reported disappointing earnings in its latest quarter, while Cracker Barrel Old County Store (CBRL), which appeals to a far less fussy clientele, beat analyst expectations.

These results run counter to the prevailing narrative on Wall Street about the holiday season, which is that higher-income consumers are feeling more confident about the economy than people lower down the ladder.

Of course, companies are also subject to many factors beyond their control. Tiffany, for instance, reported an 11 percent gain in same-store sales in the U.S., along with double-digit gains in Latin America. Yet these strong results couldn't overcome the decline in Asia, where sales declined 3 percent. The retailer's business in Japan, where Gross Domestic Product has contracted for two quarters, was especially tough, posting a 13 percent decline in this key metric when foreign currency effects are excluded.

Net income at Tiffany fell 60 percent to $38 million, or 29 cents per share. Excluding one-time items, profit was 78 cents. Revenue rose 5 percent to $960 million. Results fell short of analysts' forecasts.

"Global growth is definitely softening," said Gus Faucher, a senior economist with PNC Financial Services Group, adding that this presents a challenge to companies with international operations. "Europe may be sliding back into recession. A strong dollar is going to be a drag on business as well."

For its part, Cracker Barrel is benefiting from cost cutting and higher menu prices. The company's same-store sales rose 0.8 percent and its average check jumped 2.5 percent.

Overall, the company's net income rose 25 percent to $34 million, or $1.42 per share, in the quarter ended October 31. Revenue gained 5.3 percent to $683.4 million. The results beat expectations.

The chain, like others that serve lower-income customers, is benefiting from economic tailwinds including steady job-creation and falling gas prices. Wages, long stagnant, are starting to inch up.

"Things are finally getting better for lower- or middle-income consumers," Faucher said.

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    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.