Tiffany's New Share Buyback Program - Analyst Blog

Tiffany & Company (TIF), known for its high-end jewelry, recently announced a new share repurchase program, overriding the previous program, which was scheduled to expire at the end of this month.

The newly announced program, which is set to expire on January 31, 2013, authorizes the company to buy back up to $400.0 million shares of its common stock over the next two years through open market or private transactions.

Tiffany had about $329.0 million left at its disposal under its $1.6 billion share repurchase program, authorized in March 2005, and later increased and extended in August 2006 and January 2008, respectively. The company repurchased approximately 31.2 million shares at an average price of $40.79 per share under this program, which has now been invalidated.

Last week, the jeweler raised its full-year earnings guidance reflecting better-than-expected holiday sales. As per the company, net sales for the two-month period jumped 11.0% to $888.5 million, driven by renewed demand for jewelry in the Americas, Asia-Pacific, Japan and European regions. Excluding foreign currency translation, net sales and comparable store sales climbed 10.0% and 8.0%, respectively.

Tiffany provides the underpinning for an excellent investment through its robust sales and earnings growth by leveraging capital investments made over the past several years in distribution, manufacturing and diamond sourcing processes. Moreover, the company is well diversified from a regional perspective with nearly half of its total sales being generated internationally.

Despite stiff competition from Signet Jewelers Limited (SIG) and Zale Corporation (ZLC), Tiffany still occupies a significant position in the world jewelry market due to its distinctive brand appeal. The company now intends to expand its distribution network by adding stores in both the new and existing markets.

Given the strong fundamentals, we maintain our Outperform rating on the stock. Moreover, Tiffany holds the Zacks #1 Rank, which translates into a short-term Strong Buy recommendation, and correlates with our long-term view.