ChipSeal

Tiffany Sparkles for Patient Investors - Barron's

Wow! They "slashed" earnings projections by 20%!

I think management is way optimistic about the depth and breadth of this still looming recession, and as such they will be caught out with high inventory, high debt and high costs.

"In terms of share repurchases, we were active early in the third quarter and spent $90 million to repurchase 2.3 million shares at what we thought was the very attractive average cost of $39.61 per share." (From the conference call as transcribed at SeekingAlpha.com) Aren't they pleased about that!

$100 million of long term debt is due soon, but management isn't worried- "...we were evaluating opportunities to issue new debt, up to $300 million in order to repay $100 million of senior notes coming due within the next 12 months as well as to fund potential share repurchases."

No luck there so: "you should note that on our $450 million revolving credit facility we had $339 million outstanding at October 31 so there was still $111 million available." Provided of coarse that all covenants can be maintained!

Luxury retail is the most vulnerable sector in the hard times ahead. Management's attitude seems to be "we are special, we are immune from market forces". From the conference call:

"In closing, the 2008 holiday season is upon us and many customers will undoubtedly be seeking Tiffany's extraordinary products. Tiffany is a trusted American institution. We offer timeless design and craftsmanship that lasts. The Tiffany & Co. brand is worthy for celebrating important personal milestones, incorporating the established values of romance, love and honor."

Come spring, Tiffany's will be a better buy than now.