Diamonds, Suits, Handbags. What More Could Wall Street Want?

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The major indexes hardly moved today, with the Dow Jones rising just 0.26 points, or less than 0.01%, while the S&P 500 moved up by only 0.01%. Nevertheless, a number of retailers made some big moves this afternoon, even amid all the warnings, both on and off Wall Street, that this holiday shopping season is going to be a big disappointment. Perhaps those warnings won't apply to the companies that made a splash today.

It all started with high-end jeweler Tiffany (NYSE: TIF  ) reporting quarterly earnings before the opening bell this morning. The company posted a 50% increase in net earnings, amounting to $0.73 per share, well above the $0.49 Wall Street was expecting, and a 7% increase in sales, which hit $911 million -- again better than the $889 million analysts were looking for.

The bulk of the gains came from the Asia-Pacific region, as an increase in fashion jewelry and colored diamonds experienced higher-than-normal demand. Tiffany experienced a 27% increase in sales in the Asia-Pacific region, while it saw only a 4% and 7% jump in the Americas and Europe. In addition, the company revised its full-year guidance higher after the strong quarter to an earnings-per-share range of $3.65 to $3.75, up from $3.50 to $3.60 per share. Shares of Tiffany ended the day higher by 8.68%.  

The positive results from the high-end retailer helped pushed shares of Coach (NYSE: COH  ) higher by 3.3% today, even though the stock was downgraded this morning. Analysts at Standpoint Research who just about a month ago slapped a "buy" rating on the fashion accessories company told investors to now hold, with the stock of the mid-high-end handbag designer having increased by around 15% from the initial call.  

And finally, the fight over who has a better suit heated up today, as Men's Wearhouse (NYSE: MW  ) made a bid to buy out competitor for Jos. A. Bank (NASDAQ: JOSB  ) for $55 per share. This offer comes just weeks after Jos. A. Bank offered to buy Men's Wearhouse -- a bid that was quickly turned down. It's clear that the two sides want to make a deal, but it's not so clear how much the acquisition will cost. Shares of Jos. A. Bank rose 11.25% today and closed at $56.29, $1.29 above the offer price, while investors bid Men's Wearhouse shares up 7.5% to $50.60 per share. A united company would probably be more efficient and command higher margins, but if the purchase price is too high, it doesn't make sense for either side to purse a takeover. Current investors should sit back and be happy with any price they get, but it's probably not worth the risk to throw new money at either company right now.

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  • Report this Comment On November 27, 2013, at 1:56 AM, DeeJaeb wrote:

    We own quite a bit of stock in Tiffany. Do you think it will keep going up? We are contemplating sell right now.

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