Thursday, November 30, 2006

Tiffany Exec's Missing in Action

Tiffany (NYSE:TIF) reported improved numbers but is showing some signs for concern in Japan. The conference call was unique as it did not include any analyst questions. (Surely some of them were listening) The press release did quote Michael J. Kowalski, chairman and chief executive officer as being pleased with the results. But he also was not present. The call concluded by informing listeners that questions may be directed to Mark Aaron VP for Investor Relations. This probably complicates compliance as how do we know everyone has the same flavour, shading, nuance, perception, insight and intuitive guesswork that is so critical to the craft of securities analysis.

In the meantime this is what I am skeptical about. The two officers on the call are financial types (CFO and Investor Relations). When covering issues relating to Japan Mark Aaron the VP Investor Relations indicated “ focus on a more proactive customer engaging sales approach,…” This sounds very Western and pushy. Much like being sprayed by perfumes when walking through the cosmetics counters. Will the Japanese respond to this culturally? Does Tiffany understand consumer psyche’s in the Japanese market? What ever happened to the Japanese subtleness? When selling high end I do not believe the hard sell approach will work. There is a lack of integrity to it all.

Some financial concerns. Net sales are up 10% but receivables are up 16%. Net inventories are up 19%. Any first year business student can flag these points. The metrics are fundamental issues which need to be addressed and commented on.