The Blue Box Might Be In Your Future If You Buy This Stock

| About: Tiffany & (TIF)


Super Luxury Brand.

Never tries to sell their products at a discount.

High Margins.

Tifffany and Co (NYSE:TIF) is one of the best known and most celebrated jewelry retailers in the world. They have built a reputation as the embodiment of quality, style and sophistication. Their jewelry is worn by social elites, Hollywood actresses and royalty all over the world. Tiffany's brand extends to fragrances, silverware, china, and of course the Lombardi Trophy.

Current Status

Currently Tiffany's is facing some headwinds because of the global economic down turn. Sales growth was up only 2% on a constant exchange rate basis and down 3% when including the currency impact. Management is not satisfied but isn't panicking and have a large inventory sale.

The company went from 295 stores in Jan, 2015 to 307 stores in Jan, 2016. Most of the new stores were in Asia/Pacific (x Japan) up to 81 from 73 the previous year.

Given the lackluster year you might expect some margin compression. The company had gross margins of 59.7% and operating margins of 21% (both highs over the last 10 years).

Shareholder Friendly

The company bought back $220 million of stock at an average cost of $78 a share during 2015. In January, 2016 the board authorized a new buy back program of $500 million. The stock currently has a 2.25% yield.


Tiffany's is currently trading at a PE of 18.7. This is a significant discount to it's 5yr average of 29.2.


Clearly, as with any luxury brand, the biggest growth opportunities are in Emerging Markets including China and India. As these economies develop and have larger middle/upper classes aspiring to show off their newly earned wealth the draw of a Tiffany blue box will be irresistible to some.


The stock is currently trading at about 72. This is a bit off the lows reached in February of just under 60 but it still provides a good entry point for the long term investor. As mentioned above there are some headwinds but you get a 2.25% dividend yield that makes sticking around a little easier.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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