A month ago we said the market was going to “eat Tiffany’s for Breakfast.” Although the stock was already down 42% for the year, we thought that Tiffany’s sales were likely to be caught by higher costs and lower demand.
Tiffany’s shares were trading at $27 then. What worried us the most was that Tiffany’s latest guidance had been predicated on two assumptions. First, they expected that worldwide sales would grow approximately 9%, based on continued strong growth in Europe and Asia-Pacific. Second, they expected that growth in U.S. store sales in the fourth quarter would be strong. We had very different expectations.
Some readers were sceptical, telling us we didn’t understand Tiffany’s business. “Even in this market, the people who buy tiffany stuff pay for the name,” one commenter said.
Tiffany is now trading at less than $18 a share, down 35%. But the real test, we expect, will come in one week, when Tiffany’s announces its third quarter results on November 26th.
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