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Citigroup luxury goods analyst Oliver Chen on the outlook for luxury goods retailers such as Tiffany.
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Mornings -- report released today by The National Retail Federation retail sales are expected to rise.
3.4 percent in 2013 looks good but this is significantly lower than the four point 2% growth in 2012.
Higher payroll raises an oncoming fiscal -- comment expected to weigh on consumer sentiment this year -- we've -- someone that says the outlook for the high end retailers looks.
Pretty bright Oliver China's luxury goods analysts at Citigroup who was just and a rising star of Wall Street research.
By institutional.
Investors and congratulation on -- Yet what -- actually took a bit of ahead in the second half of 2000 called the sector overall we -- -- of those middle tier players jumping back and why is -- luxury is gonna come back to issue again.
I am excited about it the market has stabilized to a certain extent and we are seeing better performance -- above 500 dollar price points.
So there is enthusiasm at the high end and and the rich continue to be very rich.
Well let's talk about the high and we Tiffany everywhere -- -- mentioned dividend before this is one of the best brands in the world you mention the name Tiffany is almost a word in and of itself.
Have -- -- some people complain though that they haven't done as good a job marketing that brand as they could you agree.
I -- I agree with you at such a great brand that 10% square footage growth global story and that's a classic American brand with the blue box.
In terms of marketing the story and what product innovation there is opportunity for them to improve.
I think self purchasing and ladies and men looking to go buy for themselves as an opportunity.
Until we just talk about by the way the quality of the work they do they make most of there stuff here in the US in fact they've got a place right appeared purchase New York.
I'm wearing activity coupling slight right now that of last sixteen years without report we want to they just focus on say look if you want something that's gonna last it's well made -- made here go to Tiffany's.
That's exactly right and it's a great American brand that's a classic.
That's why it's so attractive even that companies who would be interest and maybe buying an American luxury brand -- Well swatch is coming and buying -- -- I think a lot of investors by surprise on American's vice president.
Protect our international market that is really been the key driver for the sector whether it's the Chinese.
The Japanese to a certain extent even some of the high and European shoppers coming -- the United States and in how crucial are these numbers gonna be internationally.
To.
That's a big part of the story probably stocks to big growth is an emerging markets so China.
Parts of Asia and Europe and in the -- flow that we get here and bars emerging spending in China.
It's due to a certain extent if you five that 2% of sales right now in China.
But that should grow over time to be massive 15% -- -- thought that GDP in China has stated percent number good -- out if you bodies that April.
Yeah yeah I think about it I don't know go ahead and.
What about the second half of two you think that we're gonna pop in the second half of of this year should you hold back if you believe in the retail sector should you hold back perhaps until.
With the we get into big to -- -- you're expecting I'm more excited for the second half but you probably wanna owner and ahead of so call it.
The net and the first quarter you just wanna be early to what to what I see happening there could be -- re acceleration.
From the little more excited overall for the second -- strong.
-- briefly touched on the news watch Harry Winston story but you might Terry Wentz and -- that they're actually making some correct moves here at this point.
In their shifted their focus I mean maybe they can't as David mentioned Tiffany is so strong -- her -- needs to take this directional shift that they are.
-- -- they've been been doing a much better job with watches and bridal rings it's another great iconic American brand.
And it's a brand that swatch is gonna pay a billion dollars for the luxury side after that deal is done they will own a diamond mine.
And as the Chinese use wedding rings only about 30% of Chinese use wedding rings as -- accelerates but should be a great trend for the diamond mine too.
Is -- that that upper middle class in trying to that you think is going to be expanding that that these retailers are going to be targeting successfully.
I do I mean another name is Michael course their Coach has focused on China.
I'm it is something that they need to be at just like e-commerce China's.
A very important aspect to this was adjusted you're in your focus on Coach because I think I mean China is known for doing knock offs in the and I have seen more knock offs of Coach friends are practically anything else in Chinatown that's not happening over in China made.
-- it's a mixed blessing when that happens because it means there's great awareness of the brands.
I wanna go back and Michael -- -- -- -- -- -- we're showing that -- an agreement means that we're showing bigger -- closures but -- and in that stock has had a monumental run.
Now is Michael chorus and -- is being credited with the success of the stock amusement.
Percent over the last right -- -- so can may continue on that.
And that trajectory it just seems so intense for -- -- This idea continue to love it mr.
Michael course is a part of the story.
It hasn't hit 8% revenues in Europe I think that can go grow about five times and they did 40% -- the product innovation of course is -- So they're doing good job actually kind of replicating.
What futon in our -- offer at a much much lower -- look.
While you're bullish if anybody can take their eyes off of that video while you're bullish on the high end what about the dividend is a lot of people say the mid level retail is really stuck in a hard place.
I think you're right we're seeing mall traffic declines of a 3% so it's been tough.
To grow in the middle.
You know I like -- -- -- he came TJ Maxx and I like the Harry Winston's of the world so low and higher good but to avoid the middle that's right yeah you really need differentiation like.
Very strong brands or you have to be offering the consumer an extremely good value.
-- -- -- ask you about the -- of the -- that you know the big department labels.
Even the Barneys if you well let me do you think -- -- are still gonna have growth in 2013.
We still see a lot of interesting things there with another Citi analyst covers some of stocks and depth but didn't we -- and generally like it we we like what's happening with innovation what's happening -- proprietary products so a lot of these department stores are coming up with.
Brand's unique to themselves and that's a great trend the designers -- coming in -- checking those deals exactly that he started out selling suits right I did it.
-- extra selling as soon as civilian MBA from Wharton focusing on retail did you ever wanna get back -- the -- you know so much about it.
-- it's great I love being in the stores I -- walk in the mall I think it's.
A great part of the story and yeah I think I can do something -- scenario I like selling suits.
Selling watches.
-- -- stock analysts I'm a stock analyst -- Canada.
That's it digital Oliver thanks for coming year end review in Europe trichet.
