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Did the Fiscal Cliff hurt Tiffany's sales?

Upscale jeweler Tiffany (TIF) announced same store sales figures for November and December Thursday morning, and the results were less than impressive.

For the two-month period, worldwide same-store sales were flat when compared to the same two months the previous year. Net sales were up 4%, but that was sharply lower than the 7% jump it enjoyed during the same period last year.

What was really troubling for investors is that the company guided its full-year earnings estimate to the lower end of its previous range, citing an uncertain economic environment. The news sent Tiffany stock lower by more than 4%.

On the other end of the spectrum is Zales (ZLC), which reported that same-store sales rose 2.3% during the holiday season. Shares of Zales rose by almost 9% on the day.

Zales has not posted an annual profit since 2008, but it believes that this is the year that it will break that trend, in a large part due to better margins as a result of recent cost-cutting measures.

The main difference in the two companies is the type of consumer that they target. While Tiffany targets the upper class, Zales targets middle income consumers. The upper class appears to have reigned in spending over the last two months, possibly due to concerns about the expiring Bush tax cuts.

Tiffany generates around 10% of its total sales from its flagship Manhattan store, where sales were down 2%.

Now that the fiscal cliff deal has been reached, and taxes have indeed been raised on the top earning households in the U.S., the future is not looking too bright for Tiffany this year. This could be bad news for the overall retail industry, for if high end consumers start to cut back on spending it may be tough for all retailers to perform well in the upcoming year.

 

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors. Follow him on Twitter at @MFatMICenter.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.