Friday, August 26, 2011

Tiffany & Co (TIF) - Still Shining with Substantial Earnings Beat and Guidance Increase

Believe it or not, there is more in the world than the whispers of Ben Bernanke - indeed there is a whole global economy out there.  By watching CNBC you'd forget that.

While macro news has dominated the past six weeks, there are still individual companies executing business as usual.  One which has thrived through the 'rebound' as the country (and indeed the globe) bifurcates further into have and have nots is Tiffany & Co (TIF).  After Apple (AAPL) this is the U.S. retailer with the second best sales per square foot - for obvious reasons (high end merchandise).  From what the company has indicated the past few months, they have been able to pass along price increases as silver, and especially gold, have jumped in value.  Earnings this morning were once again impressive with a 17 cent beat, and 30.5% year over year revenue growth.  Guidance for the year likewise increased from $3.45-$3.55 to $3.65-$3.75.  Impressively, gross margins have actually expanded even in the face of rising input costs.
  • Gross margin (gross profit as a percentage of net sales) was 59.0% in the second quarter and 58.7% in the first half, compared with 57.8% in both of the respective periods last year. 
  • Tiffany "has been able to absorb precious metal and gemstone cost increases while improving our gross and operating margins," said CEO Michael Kowalski in a statement. 
Every region showed strength, with Asia-Pacific the obvious high growth area:
  • Comparable store sales rose 22% for the quarter. Segment sales: Americas $438M (+25% Y/Y), Asia-Pacific $173M (+55% Y/Y), Japan $143M (+21% Y/Y), Europe $101M (+32% Y/Y).  

Like many of the better performing companies in the U.S., sales to this country are shrinking as a % of revenue; this quarter sales in the Americas were 50.2%.  The New York flagship store boomed with a 41% sales gain as foreign tourists flocked due to the cheap dollar - so even that 50.2% figure is misleading.  

Full report here

[May 26, 2011: Tiffany Continues to be in a Sweet Spot]
[Nov 24, 2010:  Tiffany - All that Glitters is the High End US Consumer, and Foreign Buyers]

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