Jeweler Tiffany Reported Record Net Sales in 2020 Holiday Period

Tiffany & Co, luxury jewellery and specialty retailer, said on Tuesday that it reported record net sales for the 2020 holiday period as consumers stuck at home during the COVID-19 pandemic shopped more online.

The specialty retailer, which was bought by the world’s largest luxury goods conglomerate LVMH, said its overall preliminary net sales climbed nearly 2% year-over-year in the last two months of 2020, which included sales of over 80% sales from e-commerce.

“LVMH and Tiffany (TIF) announced LVMH will acquire TIF for $135/share in November 2019, and following potential transaction risk in September 2020 and subsequent legal disputes, both parties agreed to a slightly reduced $131.50/share purchase price in October 2020,” noted Kimberly Greenberger at Morgan Stanley.

“Despite the slightly amended acquisition price, the transaction valuation remains in line with LVMH’s precedent transactions, and appears reasonably haircut to reflect COVID-19’s impact on TIF’s cash flows. We continue to see solid strategic rationale, as TIF’s status as a dominant luxury brand, global expansion potential, and pricing power make it a fundamentally attractive business”

During this period, we saw the Chinese Mainland market continue to drive our overall sales growth with certain other Asia Pacific markets also supporting the increase of approximately 20% for that region, said chief executive officer Alessandro Bogliolo.

Tiffany & Co shares closed nearly flat at $131.43 on Tuesday. However, the stock fell about 2% in 2020.

Tiffany & Co Stock Price Forecast

Three analysts who offered stock ratings for Tiffany & Co in the last three months forecast the average price in 12 months at $131.50 with a high forecast of $131.50 and a low forecast of $131.50. The average price target represents a 0.05% increase from the last price of $131.43. All those three equity analysts rated “Hold”, according to Tipranks.

Morgan Stanley gave a base target price of $131.5 with a high of $131.5 under a bull scenario and $114 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the specialty retailer’s stock.

Several other analysts have also recently commented on the stock. Jefferies raised the target price to $132 from $120. Zacks Investment Research upgraded Tiffany & Co. to a buy rating from hold and set a $129 price target in September. UBS Group lowered their price target to $123 from $135 and set a neutral rating for the company. Wells Fargo & Company lowered their price target to $120 from $135 and set an equal weight rating.

Analyst Comments

“Tiffany, which saw its shares rising in the past three months, agreed upon the new takeover price. The company in its third-quarter fiscal 2020 release confirmed that the merger with LVMH is likely to conclude in early 2021. Markedly, the company reported better-than-expected results. While quarterly earnings grew year-over-year driven by prudent cost management, net sales declined from the year-ago period,” noted equity analysts at ZACKS Research.

“Nonetheless, the rate of sales decline decelerated sharply on a sequential basis. Strong sales in Mainland China and sturdy e-commerce business aided the upbeat performance. Management now envisions a low-double-digit percentage increase in operating earnings and a high-single-digit percentage growth in earnings per share for the final quarter. However, Tiffany anticipates amid-single-digit percentage decline in total net sales for the quarter.”