Tiffany does well when the price to buy a diamond is higher. Paul Swinand, equity analyst at Morningstar says, “Tiffany has a two-year inventory cycle in diamonds, they actually have cheaper goods in inventory and their prices are still going up to the consumers, so on a relative basis they’ve got better profits and better sales when diamond prices are rising,” Swinand told “Big Data Download.”
The opposite is true for online jewelry retailer, Blue Nile. Nile pays for their diamonds after they sell them. It’s negative working capital so Nile invests nothing. It may be a great model, except when diamond prices rise.
Swinand says Tiffany is the model of a bullet-proof brand. It gets a higher price for the same diamond because of the “Tiffany brand.”
The company is still being discovered throughout the globe. Swinand told “Big Data Download,” “They don’t have same percentage of sales in China and Europe as other luxury companies. We think sales and earnings will grow as Tiffany grows throughout the world and the brand is the key to maintaining that competitive advantage”.
Tiffany’s posted better-than-expected first quarter earnings on Tuesday due to surge in demand in the Asia-Pacific region.
During the past year, ranked by volume of Yahoo! searches during the past year, people searched for Tiffany’s and competitors in this order: Kay Jewelers, Zale’s, Tiffany & Co., Jared Jewelers and Blue Nile.
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