By Ned Douthat from Ockham Research on Covestor.com.
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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV