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Tiffany (TIF) Loves to Shine: Stock Gains 22% in 6 Months

Tiffany & Co. TIF, which holds a significant position in the global jewelry market, has been doing exceptionally well. The company’s shares have managed to gain 22% in the past six months, outperforming the Zacks categorized Retail-Jewelry Stores industry’s meager gain of 2.1%. In the same time frame, the Retail-Wholesale sector and the S&P 500 have gained 12.6% and 6.2%, respectively.


Tiffany's omni-channel platform, store expansion plans, tapping of new markets and venturing into new revenue generating areas has facilitated it to outpace the industry in the said time frame.

The company is well positioned to augment its top and bottom lines performance in the long run by leveraging capital investments made in the last several years in distribution, manufacturing and diamond sourcing processes. Further, it is looking at other revenue generating avenues, and this includes expansion of its watch business. In the first-quarter fiscal 2017, top line increased 1% after witnessing a gain of 1.3% and 1.2% in the fourth and third quarter of fiscal 2016, respectively.

Tiffany also intends to expand 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 as well. The company had earlier notified that its long-term objective is to attain ROA of at least 10% and ROE of at least 15%, as notified earlier.

The company is focused on opening smaller stores that offer selected collections of lower priced higher-margin product, which in turn boosts store productivity. Tiffany concentrates on improving sales per square foot through an increase in customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives.

Few Headwinds to Counter

Sales in Americas and Europe have declined for five straight quarters now, with 3% drop recorded for each region in first-quarter fiscal 2017. Further, sales in Americas declined 3%, 2%, 9% and again 9% in the fourth, third, second and first quarters of fiscal 2016, respectively. Maintaining the same chronological order we observed that sales in Europe declined 7%, 10%, 12% and 9%, respectively.

Tiffany currently carries a Zacks Rank #3 (Hold).

Key Picks in Retail Space

Better-ranked stocks which warrant a look in the retail space include G-III Apparel Group, Ltd. GIII, Guess', Inc. GES and The Children's Place, Inc. PLCE. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group has an impressive long-term earnings growth rate of 15%.

Guess' has an impressive long-term earnings growth rate of 17.5% and also surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 33%.

The Children's Place has reported earnings beat in the trailing four quarters, with an average of 36.6%.

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Children's Place, Inc. (The) (PLCE): Free Stock Analysis Report
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