Ned Douthat from Ockham Research on
High-end jeweler Tiffany & Co. (TIF) had been fairly recession-resistant through the first three quarters of 2008, and its stock rose from its January low of $34 per share to nearly $50 in the summer.
Even with growing signs that the economy was slowing and that retail might struggle for the next few quarters, Tiffany continued to top expectations in each of the last four quarters. The iconic company tested the theory that in hard economic times, high-end retailers are more insulated from the downturn, because their affluent customers still have disposable income.
The real trouble for TIF started in October, as the economy took a turn for the worse. As Wall Street was imploding and the stock market had one of its worst months in history, there were very few stocks that did not take a serious hit.
Worse than the loss in its stock value, Tiffany's sales were notably impacted by the massive blow to consumer sentiment wrought by October's economic misery. Today was an important day for Tiffany, as it announced sales results for the holiday season (November and December). These months historically account for more than 80% of TIF's fourth-quarter revenue and the results were abysmal.Net sales for the period sank more than 21% and total same-store sales were off 24%. The comparable sales for stores within the U.S. were particularly weak, dropping 35%, with similar results from Tiffany's flagship New York City store. Clearly, October's tsunami of bad economic news cast a pall over Tiffany holiday sales.
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