3 Reasons Why You Should Snap Up Tiffany (TIF) Right Now
Zacks Investment Research | Jun 15, 2018 05:12AM ET
Tiffany & Co. (NYSE:TIF) is flexing muscle to counter competition in the jewelry industry. The company, which has a long-term expected earnings growth rate of 11.8%, is banking on several strategic initiatives to enhance customer base.
Tiffany's omni-channel platform, store expansion plans, tapping of new markets and venturing into new revenue generating areas have helped it outpace the industry in the past six months. The company has gained 34.9%, outperforming the industry’s rise of 27.4%.
Efforts to Diversify Product Portfolio
This Zacks Rank #1 (Strong Buy) company is steadily introducing jewelry designs, watch collection and fragrance. It also launched a “build-your-own program” on its website under which customers are allowed to personalize their own charm bracelets. Further, Tiffany is allowing customers to personalize their rings.
The company also renewed its licensing agreement with Luxottica Group — slated to expire on Dec 31, 2027 — for the development, production and global distribution of sunglasses and prescription frames under its brand.
The company is committed toward elevating in-store experience and replenishing product portfolio. Focus on renewing product portfolio is evident from recent launch of PAPER FLOWERS, which comprises an extensive collection of diamond and platinum articles.
The company is also looking at other revenue generating avenues, including expansion of its watch business. The company also intends to expand its distribution network by adding stores in both new and existing markets. With about half of the total sales generated internationally, we believe that the company is well diversified from a regional perspective.
Focus on Store Expansion
The company is focused on opening smaller stores that offer selected collections of lower priced higher-margin products, which in turn boost store productivity. Tiffany focuses on improving sales per square foot through increased customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives.
Management anticipates gross retail square footage growth of 2% in fiscal 2018 via eight openings, 15 relocations and two closings.
Impressive Performance
Tiffany’s first-quarter fiscal 2018 results marked the company’s eighth and fourth straight quarter of positive earnings and sales surprise, respectively. Moreover, top and bottom lines improved year over year. The solid results also led to an upbeat outlook for fiscal 2018. (Read more: Tiffany Stock Gains on Solid Q1 Earnings, Raised View )
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Management remains impressed with the solid start to the year and is focused on delivering sustainable improvement in comps, operating margin and earnings. The company plans to achieve this by working on six strategic initiatives. Toward this end, the company is focused on evolving its brand, enhancing omnichannel experience, solidifying position in core markets, increasing operating model efficiency and enriching overall organization.
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