Tiffany Hauls Costco to Court

Zacks

Tiffany & Company (TIF) recently filed a lawsuit in the U.S. District Court in New York against Costco Wholesale Corporation (COST), alleging that the warehouse club operator has for many years been selling counterfeit diamond engagement rings by misrepresenting them under the jewelry retailer’s brand name.

Tiffany has dissociated itself from Costco, claiming that the rings are not its, nor are they manufactured, approved or licensed by it. The company has charged Costco of trademark infringement, forging, unjust competition, inflicting harm on its business reputation, deceptive advertising and fraudulent business exercise.

The issue relates back to Nov 2012, when a customer happened to come across in-store signs at a Costco outlet in Huntington Beach, Calif., which claimed to be selling Tiffany’s diamond engagement rings, and intimated Tiffany about this. An investigation followed, revealing that the rings offered by Costco for sale were in fact falsely represented as being that of Tiffany.

Founded in 1837 and based in New York, Tiffany through its subsidiaries, is engaged in the designing, manufacturing and retailing activities of fine jewelry, which includes gemstone jewelry and gemstone band rings, diamond rings and wedding bands, gold or platinum jewelry, as well as sterling silver jewelry.

Tiffany is slated to release its fourth quarter and fiscal 2012 results on Mar 22, 2013. The current Zacks Consensus Estimates for the quarter and fiscal year stand at $1.37 and $3.21 per share, respectively. The stock currently holds a Zacks Rank #5 (Strong Sell).

Not all the jewelry retailers are performing as disappointingly as Tiffany. Signet Jewelers Limited (SIG) is expected to continue with its positive earnings surprise trend, and holds a Zacks Rank #2 (Buy). Another retail stock that look promising and is expected to continue with its upbeat performance is Gildan Activewear Inc. (GIL), which also carries a Zacks Rank #2 (Buy).

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