Tiffany Brings Back the Bling

 | May 29, 2013 | 10:00 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

tif

Looks like bling is back in full force after Tiffany (TIF) blew away first quarter expectations Tuesday. In reality I don't believe it ever went away.

Sure, China is slowing and anti-gift giving on the mainland is all the rage but luxury is still alive and well. Just look at the string of recent reports from the likes of Richemont (owner of Cartier recently commented April +13%), Burberry, Ferragamo and Hermes. Discrete (less logo-oriented) luxury if anything, is gaining steam.

Tiffany is a different story however. After last year's string of earnings revisions, investors cheered when the company maintained its full-year projection Tuesday. And that comes after huge upside in the first quarter. Earnings per share grew in the high single digits vs. estimates (-15 to 20%) that is not being passed on to the rest of the year, for now. Most retail stocks would be punished for "implied guide downs" but TIF had a low bar and received a hall pass.

TIF's rally Tuesday was also about the top line. Two-year, same-store sales trends accelerated in every region in the first quarter. That was quite a departure from the fourth quarter results. Most notably, Japan comps increased 21% as consumers scrambled to buy product before mid-April planned price increases. But even after price increases were implemented, business did not slow down. Guess Abenomics is really having that feel-good effect.

Europe comps were also a surprise at +6% after a negative comp in the fourth quarter. Asia tourism is no doubt helping that comp as 25% of Europe's sales are now derived from travelers.

While the company expressed disappointment with the 3% comp in the Americas, the two-year trend here also represented an acceleration in the business. Sure, the comp did get a boost from price increases and a Blue Book VIP event in New York City. We do not know exactly how much of a boost that party had as the company did not break out flagship sales this quarter.

While the high end has been the driver of the TIF top line, this has come at a cost to gross margins (silver entry level margins are higher vs. statement jewelry). Based on the company's comments on the first quarter call, it sounds like aspirational higher margin product may get a new lease on life through marketing and innovation.  

It appears 2012 was the year of the guide down for TIF; 2013 is shaping up to be the year of the low bar. Investors say bling it on!

Columnist Conversations

Lang:
We waited a bit on this one but still banked a nice winner. SOLD AAPL MAY 525 CALL AT 41.65 (in at 12, so 247%...
No slowdown in cyber attacks and using the pullback to add to the KEYW position at Thematic Growth
General Electric dipped down to key nearby support during the early stock sell off. GE filled the high v...
Apple (APPL) has been trading for over a year within the parameters of a set Fibonacci retracement levels. The...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.