Tiffany & Co. Stock Will Continue to Shine Bright Like a Diamond
Tiffany & Co. (NYSE:TIF) is pretty much a household name at this point. It is also a very profitable company targeting the higher-end consumer. For those unfamiliar with the company, it designs, manufactures, and retails jewelry worldwide. The company operates an American, Asia-Pacific, Japanese, European, and “Other” segment. Its jewelry products include fine and solitaire jewelry, engagement rings and wedding bands to brides and grooms, as well as non-gemstone, sterling silver, gold, and metal jewelry.
The company also sells timepieces, leather goods, sterling silverware, china, crystal, stationery, fragrances, and accessories. Tiffany & Co. sells its products through retail sales, Internet and catalog sales, business-to-business sales, and wholesale distribution, It operates about 300 stores, including 122 stores in the Americas, 72 stores in the Asia-Pacific region, 55 stores in Japan, 38 stores in Europe, five stores in the United Arab Emirates, and one store in Russia. The stock is right under its 52-week high and sits at $98.50 at the time of this writing. Can the stock shine even brighter moving forward?
Well, the company’s first quarter was stellar. It saw worldwide net sales rise 13 percent to $1 billion while comparable store sales rose 11 percent due to growth in most regions. Net earnings increased 50 percent to $126 million, or 97 cents per diluted share, up from $84 million, or 65 cents per diluted share, in last year’s first quarter, when pre-tax expenses of $9 million, or 5 cents per diluted share, were recorded for staff and occupancy reductions.
Excluding those expenses, net earnings rose 41 percent. Gross margin (gross profit as a percentage of net sales) was 58.2 percent in the first quarter, compared with 56.2 percent last year. The increase reflects favorable product costs and price increases across all product categories and regions, as well as sales leverage on fixed costs resulting from the strong increase in worldwide net sales. Selling, general, and administrative expenses increased 5 percent in the first quarter.