3 Powerful Brands Delivering Extraordinary Performance: Tiffany, Michael Kors, and Williams-Sonoma

Brand differentiation can be one of the most powerful sources of competitive strengths, a key aspect to consider when evaluating investment decisions. Tiffany (NYSE: TIF  ) , Michael Kors (NYSE: KORS  ) , and Williams-Sonoma (NYSE: WSM  ) are firing on all cylinders while generating big profitability for shareholders thanks to their exclusive brands, and this says a lot about these companies and their potential over the coming years.

Tiffany is shining around the world
Tiffany is arguably the most valuable and recognized brand in the jewelry business, and the company is performing remarkably well lately. Sales during the quarter ended on April 30 increased 13% versus the same period in the prior year to more than $1 billion, considerably better than analysts' forecasts of $953 million for the quarter.

Source: Tiffany.

While performance was strong across the board, growth rates were particularly encouraging in Asia. Sales in the Asia-Pacific region jumped by 17% to $261 million, sales adjusted for currency fluctuations increased by an even stronger 19% in the region, and comparable-store sales grew by an impressive 10%.

Strong product pricing and disciplined cost management allowed Tiffany to expand profits during the quarter, as gross  margin increased 200 basis points to 58.2% of sales. Net income grew 50% versus the same quarter in the prior year, and earnings per share of $0.97 were materially better than the $0.78 per share Wall Street analysts forecasted on average.

Healthy sales growth, expanding profit margins, and abundant opportunities in international markets mean that Tiffany is well positioned to continue delivering glowing performance for investors over the coming years.

Michael Kors is on the right side of the trend
Michael Kors has been one of the most spectacular growth stories in the affordable luxury fashion business over the past several years. The industry can be particularly fickle and dynamic; however, judging by recent financial reports, Michael Kors is still as hot as it gets.

Source: Michael Kors.

Sales during the quarter ended on March 29 increased by an explosive 53.6% versus the same quarter in the prior year to $917.5 million, comfortably above Wall Street estimates of $818.1 million in sales for the quarter.

Retail revenues grew 49.7% to $408.4 million because of a 26.2% increase in comparable-store sales and 101 net new store openings. Wholesale sales jumped 55.5% to $473.7 million, and licensing revenues increased 79.1% to $35.4 million.

Michael Kors is a remarkably profitable business even if management anticipates that profit margins could be under pressure as the company invests for growth in the coming quarters.

Gross profit margin increased to 59.9% of sales during the last quarter, compared with 59.7% in the same quarter during the prior year. Operating margin was also higher, reaching 26.8% of sales versus 26% of revenues during the same period in 2013.

Net earnings per share came in at $0.78, a big year-over-year increase of 56%, and considerably better than the $0.68 per share analysts forecasted on average.

As long as Michael Kors continues delivering the right products to its affluent and fashion-conscious clientele, strong demand is indicates the company has enormous room for expansion, both in the U.S. and abroad.

Multiple tailwinds for Williams-Sonoma
Williams-Sonoma is benefiting from multiple tailwinds at the same time. High-end brands are a particularly strong spot in the generally dismal retail business, and Williams-Sonoma has done an impressive job at adapting to the the online retail revolution, a crucial competitive factor in the current environment.

Source: Williams-Sonoma.

Sales during the quarter ended on May 4 grew 9.7% to $974 million, driven by a 10% increase in comparable-brand sales. This was better than Wall Street analysts' expectation of $943 million in revenues for the quarter. Direct-to-consumer sales increased 17.2% versus the prior year, representing 50% of total revenues.

Both gross and operating margins were marginally higher during the quarter, and Williams-Sonoma delivered a big 20% increase in earnings per share, reaching $0.48 during the period versus an average forecast of $0.44 from Wall Street analysts.

While most peers are being hurt by the competition from online retailers and lackluster consumer spending, Williams-Sonoma is growing impressively in the face of challenging industry conditions, and this is a clear reflection of the company's competitive strengths and management quality.

Foolish takeaway
Tiffany, Michael Kors, and Williams-Sonoma are delivering extraordinary financial performance thanks to their highly demanded brands and strong pricing power. The three companies are solid candidates for investors looking to position their portfolio in unique consumer names with attractive prospects for sustained growth.

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