Tiffany & Co. (TIF)

bullishbabo

This stock appears to be above where it was last year, but I don’t believe that the economy has recovered enough to have faith that their sales and profits will support their current stock price. The upside potential appears fairly limited unless they stockpiled gold and silver jewelry when the prices of the metals were far lower. It appears more likely that optimism about a recovery has contributed to their stock gains. That optimism can quickly fade with increasing unemployment and depressed retail sales during the holiday season.

Came up on my stock screener to short.

TIFFANY Is the underdog. its not keeping up with other high end brands like Coach.

Nothing interesting to buy here except their charm bracelets.

Overpriced compared to others in the industry.

Already showing signs of revival. Weddings go on as planned. Stronger European market compensates for lagging US and Japan sales

Discretionary items. On March 23 TIF made an announcement of a profit drop of 76% for the quarter yet a week later the stock is the same price it was when it made the announcement. Increasing job losses will continue to eat away at future profits.

Challenging sales environment in high-end consumer

STRONG COMPANY

3/4/09 Pitch: Downthumb. Earnings 3/23/09, 8:30 AM. This company is in serious trouble. High short-term debt and plunging sales.
Past trades:
11/18/08 Pitch: Upthumb. Earnings 11/26/08, 8:30 AM Blowout earnings last quarter. Since then, stock has come down over 50%. They'll be fine. Closed 11/26/08 @ $20.47 for +4.16 points.
8/21/08 Pitch: Upthumb. Earnings 2008-08-28 8:30am Generally optimistic on luxury retailers. Therefore a thumb up. Closed 10/13/08 @ $30.33 for +5.12 points.

I see a long recession in the works and high unemployment. I do not see a recovery in the stock market for at least several years. So business at Tiffany will suffer as even the affluent will be reluctant to spend because their discretionary income will take a hit.

Paying 10% on debt.. ouch! you have to be desperate. Thats going to take a chunk out of the profit margin (if there is any). If the stock was going to go up, they would have traded buffet stock for $$, but he wanted 10% yielding bonds instead. WHY?? duh this things not going to outperform the market. AM I missing something??

This diamond has flaws that will show up soon in earnings surprises(NEGATIVE).It is a opportunity to short at $25!

unless foreigners are flocking to this company, this co sales will take a dive.New York financial district in shambles, and who this year will buy their secretary a diamond tennis bracelet?

I couldn't resist joining the party, we have some more to fall.. I actually don't hate this company as many others appear to here. Yes thier stuff is way over priced, and yes you pay for the "little blue box", but it sure is a sweet looking box!

Ok, my main reason for this underperform is simple. The holiday shopping season is going to be non-existent. People are not spending money this year even if they have it. While many argue that Tiffany's is high end and will be resistant. I disagree. Tiffany caters to middle class significantly as well, and this is where they will be hurt the most. the rich will continue buying expensive things. However, many middle class people were stretching to make purchases at Tiffny's in order to feel "cool". They will on longer be able to make this stretch. I think people underestimate the amount of sales Tiffany's does in the $100-250 range.

This is soley based on my judgement and macro-trends, just fyi...

While the truly rich will still buy things from Tiffany's, their customer base is likely to shrink. The middle-class squeeze that will result from the recession is going to be murder on high-end stores like this that sold low-end items as hugely inflated prices to aspirational shoppers.

Go into a Tiffany's store some time and see what you can get on a budget of maybe $200-300. They have stuff, and it's basically garbage that comes in a little blue box. People actually buy that junk, or it wouldn't be there in the display case. The jewelry itself is only for people who don't know any better. I mean who wears stainless steel or sterling silver jewelry. It looks like something someone would try to sell you on the beach in Mexico, but for more like 50 pesos.

The only excuse I can think of for this junk is that people buy it to get the blue box, and then discard the actual Tiffany's sterling silver ring or whatever and put in the engagement ring they bought elsewhere. I considered doing it myself actually, but I didn't bother.

My wife has some "Return to Tiffany's" dog collar looking thing that I would be ashamed to sell if it was solid gold, but I think this item is actually stainless steel. One of her girlfriends gave it to her a few years back for her birthday (probably as a re-gift). I suggested we put it in the garage sale, but she kept it because it was Tiffany's. I would have felt like I was cheating someone to charge $2 for it. Anyway, somewhere along the line the brand image is going to be ruined by selling garbage like that. That dog collar is only for people who don't know any better.

This CAPS account is tracking the 200 highest yielding S&P stocks.

Yes the company is high-end retail. Yes the stock has tanked. Yes people aren't buying like they used to. Yes Holiday sales are going to be small. Most of that seems to be pretty short-term. The only thing that isn't is the fact that the company is high-end retail. And know what that means?

Profitability. Long-term profitability. Very, very decent growth rates for a big company. Not only that, but they pay a decent 3.4% dividend yield. Not to mention that the yield growth far exceeds that of its sector.

EPS has increased steadily without counting the Holiday rush, so even if this season is grim for Tiffany's, every other will be steady. Their profit margins are double digit. What's not to like about that? And also, it's noteworthy the company's solid double digit ROE and ROI and ROA.

The other thing I like is how long management has been with the company. Since 1998, they've had a stock price growth of 622%. These guys know what they're doing, and they know how to outlast a slow shopping season.

Value stock.

Maybe they could start a fashion trend by selling bankruptcy rings. People would max out their credit cards buying these rings, then declare bankruptcy.

The only way I can see TIF making any sales during this economic environment is if the number of high cost weddings rise dramatically.