You're watching...
Morningstar analyst Paul Swinland on Tiffany’s outlook for growth and why companies such as Blue Nile are not competing directly with the jeweler.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
A Fox Business alert diamond in the rough as big name reports big numbers and that is Tiffany take a look at the stock right now -- by the luxury jeweler reported fourth quarter profits -- Breaking a five quarter long streak of better than expected results but.
Here's the but Tiffany issued a stronger than expected outlook for the current year on higher sales -- one and covers Tiffany from Morningstar.
He is here with his take on the numbers -- you expecting conservative guidance.
Out Hillary tell this morning yet and get that were you surprised.
Well I think you know the guidance probably is conservative and that's why -- the stock's going higher in other words.
The streets interpreting that as 10% growth from mostly stores.
They're saying maybe -- can go higher and earnings -- ten to 13% growth could also go a little higher than they're expecting.
All right see you think that we're actually looking past the numbers passed the outlook that we got today I mean that's fair enough -- -- cares -- your story about diamond prices.
-- that was one of the concerns last year.
With a name like Tiffany because what they're buying actually is gonna be falling for for the next two years.
What did you hear today that about diamond prices the -- change.
-- well.
You don't want it neat things about the diamond market is different companies have different inventory cycles Tiffany has a pretty long inventory cycle -- -- vertically integrated.
So they've got more flexibility.
To.
Both raise prices and dampen any swings in the commodity inputs.
So diamond prices went through the roof in summer 2011.
-- work there it's way and the inventory and and sales and gross margin pressure in 2012.
Now the company is saying those pressures aren't going to be as bad as big pot.
And growth partners -- actually turn around in the fourth quarter of 2012.
Well let's talk about I think nothing alone and now let's talk about 2011 because you know as we got the report we went through the numbers here we're looking -- a couple of key factors.
But I wanna play your attention -- our viewers as well look -- at sales and 2015%.
Higher in the Americas that was nice to see 17% in Europe.
36%.
-- -- -- higher in the Asia Pacific region.
Isn't gonna be the Asia Pacific reason region isn't going to be the Chinese that's gonna put this company.
-- I think they're two interesting points there wonders if if Tiffany raised its retail prices 50%.
On average for the year let's just assume.
Actually you know -- 50% rise in sales means that the man was pretty steady.
But to your point China really is the growth driver both in the US and Europe.
And then longer term I actually think that we're may be underestimating.
Tiffany's long term growth in China and may -- actually in India as well.
Let me ask you about Tiffany compared to one of its main competitors -- what used to be one of his main competitors that was Blue Nile.
Two different stocks very different stories Blue Nile it was believed when the company was first created Republican there's going to be a company name is gonna take over -- because.
They're competing online.
That not happened Blue Nile under a lot of pressure and this was -- to be a big competitor for Tiffany.
Did they would no longer worried Dublin -- Well I don't think -- ever worried about Blue Nile and I -- scratch my head whenever -- that comparison.
Blue Nile built a great brand but it built its brand I think he we're gonna give you the best price so -- selected for a customer.
That frankly was kind of like us stock catalyst they looked at all the aspects of the diamond and they selected on price and value for you know.
Value for their money Tiffany is a brand that you know connects with people's emotions.
And they actually want -- to going to the store that's part of the emotional experience of that buying a diamond engagement -- and now yeah go ahead.
You spend more money I mean I -- yes hello hello authentic it doesn't get some roads that are you going there could something for that money and that's.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Obviously -- -- looking a lot of big names that you were -- and Asia Pacific look at somebody like coat.
Look at says Sachs without naming a lot of these stocks have actually been performing well do you think overall that the group that's gonna continue.
To be a boom for our viewers.
Well I think -- V there is actually got one of the dependency is for the global luxury is actually in my opinion liquidity.
And so when you have the United States printing money now in 2000 and of 2011 you have the European Union with a very easy monetary policy.
China isn't you you're -- prior comment was that China is now about a slowdown.
It seems like it's gonna grow it's gonna slow.
78%.
Growth is still not a slowdown for most people so.
What I've been hearing is.
Global luxury sales to look for tourists are still actually picking up a little bit.
And global demand for precious metals and diamonds is actually seems like it's gonna pick up in 2012 so I think it bodes well for the sector.
Tiffany had been the first.
And only company to Warren about December sales it looks like that was just a speed bump now and 2012.
Should be pretty solid.
Also one Anna Morningstar thank you for the analysis thanks for taking a look at Tiffany with us and for our viewers as well Paul thank you.
Thank you.
