Tiffany’s (NYSE:TIF) reports quarterly results shortly. Ponder this Bear Case Scenario:
Most of Tiffany’s sales are under $1,000 per item. This strongly suggests Tiffany is more of an aspirational brand and not the recession proof luxury brand some investors are anchored on.
The company is highly reliant on a few stores in a few markets. The flagship store in Manhattan generates some 9% of sales. Manhattan while rich is not the only wealthy enclave in the world.
Tokyo Ginza also represents an undue concentration of sales and profits.
Tiffany is also selling lower cost diamonds from the past few years and may see some pricing squeezes as the inventory turns.
Gold has dropped in price. If consumers start demanding cheaper pricing margins will shrink. When gold snaps back the aspirational buyer will have serious sticker shock.
George Gutowski writes from a caveat emptor perspective.
Bonus Safety Talk: When buying presents for the women in your life buy jewelry. The packages are small, easily concealed and are not heavy to lift. Don’t throw your back out.