Tiffany Pursues Diamond Sales Of Fallen Competitors

Published on 01/09/09

Tiffany & Co. sees an unprecedented opportunity to grab market share from jewelers that have succumbed to recession, and some analysts predict the stock will jump higher as the chain wins clients from fallen rivals.

“With the number of bankruptcies and reorganizations in the industry, we are hopeful our sales can outpace the economic recovery,” Chairman and Chief Executive Officer Michael Kowalski said in an Aug. 28 telephone interview. “I have been here at Tiffany for 25 years, and in my own personal experience, we have not encountered an environment which we believe provides the long-term opportunity that this one does.”

Tiffany can capture sales in a $150 to $25,000 price range, with diamond jewelry a primary category, Kowalski said. The company is opening smaller stores, adding new jewelry designs and offering more products online. It is seeking to pick up better locations at lower rents as well as managers and sales staff, the 57-year-old CEO said.

The strategies may help boost Tiffany shares by as much as 20 percent within 12 to 18 months, analysts project. Brian Nagel at Oppenheimer & Co. raised his target share price to $45 from $38 after the company reported higher-than-estimated profit last week. Barclays Capital’s Robert Drbul increased his by $2 to $42, and Dorothy Lakner at Caris & Co. by $4 to that level. The analysts, all based in New York, rate the stock “outperform,” “overweight,” and “above-average,” respectively.