Brian Sozzi Talks Tiffany's

Brian Sozzi of Wall Street Strategies is out with a research report on luxury names, including Tiffany & Co. TIF. In a note to clients, Sozzi writes, "The tape has been ugly all week long for luxury retail names, including Saks (SKS), Tiffany & Co. (TIF), Coach (COH), and Nordstrom (JWN); this is interesting in that greater interest has been shown for companies with little to no pricing power, such as in the teen apparel sector. Initially the moves looked like technical breakdowns, meaning buying interest dried up around must hold support points, but that singular thought dissipated quickly. Why does investor enthusiasm for stocks of companies selling stuff to rich people globally suddenly disappear? Foremost there is an unwillingness to push the P/E multiples on the stocks higher (already trading on premiums) combined with a lack of belief in elevated forward EPS estimates, arising in this instance from domestic (tourist to U.S. gone for holidays? spending by the locals not enough to make holiday numbers?) and international considerations. We have generally known the domestic and EU consumer stories, but what has buffeted the luxury sector is no doubt China. Sales in the country have run off the charts over the past twelve months for Tiffany and Coach as each expand points of distribution, jack up prices to take advantage of breakneck demand in tier one cities, and open up the offering architecture to include additional products." Shares of TIF closed at $64.70 yesterday.