If anyone was still unconvinced that luxury goods shoppers are now back to spending big bucks again, then all they need to do is look at pre-eminent luxury retail stock Tiffany & Co. (TIF) and its holiday sales figures to put that notion to rest.
On Tuesday, Jan. 12, the upscale jewelry chain raised its profit outlook for the full year after its holiday sales numbers blew past analyst expectations. Tiffany said that in the two months ended Dec. 31, sales rose 17% over the same period a year ago. Excluding the currency-translation impact, sales would have risen 13% with the all-important same-store sales numbers increasing 8%.
Tiffany now expects its profit outlook for the fiscal year ending Jan. 31 to be in the range of $2.07 to $2.12 per share, well above earlier guidance of as much as $1.98 per share. Total sales now are forecast to be $2.7 billion for the year. Both of these numbers are well above consensus Street estimates for earnings of $1.96 per share on sales of $2.65 billion.
The excellent holiday sales numbers for Tiffany aren't an isolated case. Last week we received positive sales news from two other high-profile luxury retail stocks, Nordstrom (JWN) and Saks(SKS). Both high-end department stores reported a significant increase in same-store sales, a measure of performance from stores open at least one year.
Nordstrom's same-store sales for December climbed 7.4%, nearly tripling the consensus analyst estimate for same-store sales of just 2.5%. Saks did even better than rival Nordstrom, posting a same-store sales surge of 9.9% for the month. Analysts only expected the retailer's same-store sales to climb 2.8%.
It seems the analysts grossly underestimated the desire for consumers to spend money at high-end luxury department stores, as the numbers here for Tiffany, Nordstrom and Saks clearly reveal.
Another retailer I expect to come in with better-than-expected sales numbers for the holiday season is handbag, wallet and luggage retailer Coach (COH). The company's product mix of high-priced items, along with its introduction of the slightly lower-priced Poppy collection, has real appeal to luxury consumers, and it is one key reason why COH stock was recently upgraded to "buy" from "neutral" by Bank of America-Merrill Lynch.
The numbers for these retailers tell us two things. First, Wall Street pundits were very wrong when it comes to the strength of the luxury goods shopper. Second, we continue to see evidence that luxury retail stocks are back, and back in a big way.
Yes, there still are plenty of cost-conscious shoppers out there. However, December's same-store sales numbers for Tiffany, Nordstrom and Saks clearly tell us that there also are plenty of shoppers willing to open their wallets for higher-priced goods served with an upscale experience.
Together, these four luxury retailers represent the best-of-breed retails stocks in the luxury retail space, and they constitute four luxury retails stocks investors with a taste for the retail sector need to buy right now.
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