Tiffany + Co. is a holding company that operates through its subsidiary companies. The Company's principal subsidiary, Tiffany and Company (Tiffany), is a jeweler and specialty retailer whose principal merchandise offering is jewelry. Its the 2nd largest Jewelry company in the world.
Bilibala held Tiffany + Co (TIF) since 2010, with a pruchase price between $46 to $55. It is the 5th largest holding in the portfolio.
- 2013 9M Sales up 7% to $2,733M or 11% in constant FX, same store sales (sss) up 7% in constant FX, above expectation and as you can see market in Asia was the driver of the sales. China, India and Arab should still represent large growth opportunities in future.
- - Americas sales up 4%, sss up 1%
- - Asia-Pacific sales up 21%, sss up 15%
- - Japan sales up 12%, sss 11%
- - Europe sales up 7%, sss up 5%
- - Others sales up 56%, sss up 1%
- Earning up 20% to $285M or $2.21 EPS, above expectation
- Full year EPS forecast up $0.15 to $3.65-$3.75, above expectation which trigger many analysts increase their target price of Tiffany + Co.
- Gross margin up 260 bps to 57.0%,
- Net margin up 119 bps to 10.43%
- Debt equity ratio down 250 bps to 48.06%
- 2013 Forecast PE (as of 13/12/03) was 23.8
Comments
Although Luxury Goods industry is higher competitive, the strong "blue box" brand image and its powerful supply chain in diamond enable Tiffany to price at much higher margin above its competitor. In 2012, Tiffany was the 2nd highest sales per square foot winner just behind Apple store. Based on the new stores open trend and mild increase in sss lower average cost of diamonds, I expect sales, gross profit and EPS growth by 7%, 9% and 13% per year. I therefore increase my target price from US$84 to US$89 but since the price has already reflected the above expectation result, I changed my recommendation from BUY to HOLD.
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