Tiffany Management Convinces Analysts It's Getting Polished

Tiffany & Co. TIF's getting its priorities in order. CEO Alessandro Bogliolo convinced analysts Wednesday he was polishing the jeweler’s processes and products this year to ensure top-line growth.

Credit Suisse analysts left the meeting with the impression that “stepped-up capex” should boost revenue and eliminate the need for a consecutive investment year.

Comps And Product Expansion

Tiffany has faded 19.5 percent off its January peak — apparent punishment for weaker January sales. But this might have been an overreaction.

“The market clearly interpreted a softer January as a harbinger of weaker results, but we were not surprised given the shift in Chinese New Year as well as a few large comp purchases at the NY flagship,” KeyBanc Capital Markets analyst Edward Yruma wrote in a note. “Going forward, we expect that Hardware, Paper Flowers, and the new giftable product will help accelerate comps this year.”

Loop Capital Markets forecasts 2.7-percent same-store-sales growth in 2018 supported by improvements in every major product category driven by design innovation and store refreshes.

“We expect a migration away from ‘safe’ design evolution and into more significant refreshes of existing lines (such as the keys and T collections) in addition to large collection launches,” Loop analyst Laura Champine wrote in a note.

Omni-Channel Sales

Management indicated that just $50 billion of the $250 billion personal jewelry market is transacted without online research. Accordingly, Tiffany is investing heavily in digital resources, social media marketing and an updated e-commerce model this year.

“We believe the company's investment in digital content tools and platforming will enable better data analytics,” Champine said.

Automation

Management is also leaning on technology to decentralize distribution and accelerate order processing.

“We believe savings from cost efficiency/automation opportunities can be redeployed more aggressively to client touch points,” Credit Suisse analysts wrote.

Ratings And Price

Loop upgraded Tiffany to Buy with a $113 price target;

KeyBanc maintained an Overweight rating with a $120 price target; and

Credit Suisse maintained an Outperform rating with a $120 price target.

Shares closed up 1.6 percent at $98.12.

Related Links:

Citi Touts Tiffany's Tailwinds, Upgrades To Buy

Report: The Retailers Most Dependent On Holiday Sales