Tiffany's Special Sparkle

Tiffany's announced Q4 numbers and as you would expect from a retailer of beautiful but un-necessary baubles, sales are off. Way off. Bauble are sill beautiful but here are a few things that are not so beautiful in the press release.

Everyone knows the economy stinks. Read how carefully the words are crafted. Before any substantive numbers are reported they lay out this sentence in the first paragraph "The quarter’s sales were in line with previously-reported holiday season results. This sales performance, combined with a lower operating margin, led to a decline in fourth quarter earnings as expected."

Sounds like everything is under control. Admittedly its not a good year but we are managing quite well. The annual numbers are not bad. Q4 sales are off by 20%.

20% should have been foreseen. They are now caught by an inventory bulge and they have taken on huge amounts of debt. They claim to be positioning themselves for the future. But the huge debt levels, ballooning pension liabilities and bloated inventories do not match the soothing sultry tone of executive comments.

Yes the economy is a major factor. Tiffany"s got it wrong and seems to be still getting it wrong. They did not expect this decline, otherwise they would have put it into reverse much sooner.