Thursday, May 26, 2011

Tiffany (TIF) Continues to Be in the Sweet Spot

While Polo Ralph Lauren (RL) took a hit yesterday, the high end is still the place to be in an increasingly bifurcated society as signified by the results this morning from Tiffany (TIF).  The Federal Reserve's explicit targeting of the stock market has benefited the top 10%, and especially top 1%, [Nov 10, 2010: Who Will Any Form of Intermediate Term Wealth Effect Really Help? Not the Masses] and the weak dollar has been a boon for the NYC flagship store as foreigners show up in droves.  The ability to pass along price hikes for this sort of consumer is much more easy than the rest of the consumer discretionary food chain.
  • Gross margin rose to 58.3% from 57.8%. Total same-store sales rose 19%, or 15% on a constant-exchange-rate basis. 
The attractiveness of 'name brands' for the new affluent class in Asia is also developing into a major driver. 

Tiffany beat estimates by 10 cents (67c v 57c estimate), beat on revenue ($761M v $704M estimate) and raised year end targets (Jan 2012) to $3.45-$3.55 vs $3.33 estimate.  Japan performed much better than expected this quarter [partly due to currency USD v Yen] which seems to be where the analysts (and Tiffany itself) were off in estimating.  Full report here.

Via Reuters:

  • Tiffany & Co said sales in Japan have picked up more quickly than expected after the March earthquake, and the upscale jeweler raised its full-year profit forecast.  Globally, sales rose 20 percent to $761 million in the first quarter, with the largest gains in Asia outside Japan and in the Americas. 
  • Overall sales in Japan, where the chain operates 57 stores, rose 7 percent during the quarterTiffany, which gets 18 percent of its sales in Japan, had forecast in March that sales there would fall 15 percent during the quarter as a result of Japan's massive earthquake and the tsunami and nuclear disaster that followed.  Sales at Japan stores open at least a year fell 3 percent, but Tiffany said all of its stores there that had closed after the quake have reopened.
  • Sales in Asia outside Japan rose 37 percent, while in the Americas, they were up 19 percent. 
  • At Tiffany's flagship store on Manhattan's Fifth Avenue, sales rose 23 percent.
  • Tiffany forecast on Thursday that global net sales would rise by a mid-teens percentage in the current quarter. 
  • Net income rose 25.8 percent to $81.1 million, or 63 cents per share, from $64.4 million, or 50 cents a year earlier.  Excluding one-time items, Tiffany earned 67 cents a share, beating Wall Street forecasts of 57 cents, according to Thomson Reuters I/B/E/S. 
  • Tiffany raised its full-year profit outlook by 10 cents and now expects to earn between $3.45 and $3.55 per share in the fiscal year that ends in January 2012. That compares with Wall Street forecasts of $3.33.

[Nov 24, 2010:  All that Glitters is the High End US Consumer, and Foreign Buyers]

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