Tiffany: Time For "Breakfast," Or a Brown Bag Lunch? - Holiday Central

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.
Smartphone Guide
Here's a need-to-know guide to nine devices, based on features, price, network and platform.
Wines for the Holidays
Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

CNBC ON DIGG

ABOUT THIS BLOG

It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

Stay up to date with the Holiday Central

We’ll send the latest "Holiday Central" posts directly to you

Subscribe to this RSS feed

How to use RSS?

Text Size

Mar.24

4:00 PM ET

Monday, 24 Mar 2008

Tiffany: Time For "Breakfast," Or a Brown Bag Lunch?

Posted By:Margaret Brennan

Topics:Earnings | Consumers | Retail Sales

Sectors:Personal and Household Goods | Retail

Companies:Nordstrom Inc | Saks Incorporated | Tiffany and Co

Tiffany & Co.
Flickr User: bretthpatrick
The Tiffany & Co. store in New York City.
High end sales are the last to fall off going into a downturn and the first to pickup coming out of a recession. So what does Tiffany's [TIF Loading... () ] better than expected earnings tell us about where we are in the middle of those two options?

Well, not a whole that more than we already knew:

(1) The aspirational mid-income customer is in trouble (hence weakness in silver jewelry sales in the $500 and below category,
(2) Domestic sales are slowing (up just 1 percent on the quarter) while international sales are booming (+12 percent.) Here's the interesting part: foreign buyers accounted for 14 pecent of retail sales right here in the U.S. Ironically, the weak dollar is helping to boost Tiffany's U.S. sales (thanks to European and Japanese shoppers) while it is also hurting Tiffany's profitability by helping to raise commodity costs.

Tiffany's does expect sales softness in the U.S. through the second quarter. The Middle East, Russia and Asia are hot markets though for the jeweler with the little blue box. Today's stock performance (its strongest in 7 years) has something to do with the high level of short interest leading into earnings results as well as optimism about Tiffany's 1.27 EPS results.