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Merger Talk: Coach May Be In Play

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With interest rates at lows, the equity markets at all-time highs, and executive teams looking for strategic and opportunistic growth opportunities, the table is set for some wheeling and dealing, in our view. We think Coach (COH), the aspirational maker of handbag and accessories, is on the radar of a number of suitors, the most likely being LVMH Moet Hennessy (LVMHF), according to Prime Retailer: LVMH groups representatives have recently shown interest in Coach, sources say. Recent shows and fashion line has appealed to the design team of LVMH, one of the persons admits. It could be the turnaround that attracts LVMH – turning its attention from classical high end luxury accessories label to full RTW apparel lineup. There are … Read more

Tiffany Dazzles in Second Quarter; Coach Now Yielding ~4%

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Be sure to catch Valuentum’s Brian Nelson discussing Tiffany’s reports on CNBC Asia at 9:30 PM CST today. The video clip will be posted to the website as soon as it is made available. Luxury jewelry maker Tiffany (TIF) reported fantastic second-quarter results Wednesday and raised its bottom-line guidance for the second time this year and in as many quarters. Tiffany has been benefiting from a modernization of its classical jewelry line-up thanks to the ongoing success of its newest ATLAS collection (shown right) and TIFFANY T jewelry collection (shown below). The ATLAS collection is named for the mythic Greek god and showcases Roman numerals in designs symbolic of strength and freedom on pieces ranging from pendants and earrings to … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Tiffany and Nike Disappoint in China

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Valuentum previously outlined the importance of brand strength in its comprehensive piece: “Valuentum’s Comprehensive Report on Retail Brands.” This article will focus on Tiffany’s (TIF) and Nike’s (NKE) performance in the Asia-Pacific, and where applicable, China, a country that we believe is vital for long-term expansion and to support our fair value estimates of both firms. Recent reports have put a damper on the outlook for luxury spending in China during 2014. Though the outlook is consistent with data points we’ve received with respect to slowing, but still robust, economic expansion in China, the commentary is worth nothing: Wealthy Chinese are likely to buy fewer luxury goods again this year after the steepest cut-back on spending in at least five … Read more

Tiffany’s Bottom Line Sparkles in 3Q; Pricing Power Evident

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Tiffany’s (TIF) third-quarter results, released Tuesday, showed solid revenue expansion and fantastic operating leverage. Worldwide net sales jumped 7% on a reported basis and 11% on a constant-currency basis; comparable sales advanced 7%. Reported sales in the Americas region increased 4% thanks in part to growth in Tiffany’s New York flagship store. In the Asia-Pacific region, reported revenue leapt an impressive 27%; comparable sales in the region jumped 22%. Negative currency impacts hurt reported sales in Japan, but underlying, constant-currency performance in the country was solid. Even in Europe, a region that continues to struggle for economic expansion, Tiffany revealed 7% reported growth thanks in part to strength in the United Kingdom. The company’s profit margin performance was also wonderful … Read more