Stocks in the Luxury Segment

PUBLISHED: Mar 07 2013 @ 10:13 | Comments (0) | More info about Ed Liston

With economy gaining strength employment figures improving and incomes rising Retail Industry is all set to come out of its slump period. Within the retail industry the segment of luxury retail was not much impacted by the economic downturn as luxury retailers thrive on the spending of the elite 1%, but it seems to be entering into a better phase with the return of the economic confidence.

Tiffany & Co. (NYSE:TIF) – The company along with its subsidiaries, engages in the design, manufacturing and retail of fine jewelry worldwide. The company also provides time pieces, sterling silver goods china, crystal, stationery, fragrances, personal accessories, and leather goods. It operates through 251 stores worldwide. The revenues of the company have grown by almost 34% between 2010 and 2012. The stock is presently trading around $70 with P/E ratio of 21.66 and EPS of 3.24. The company has maintained its dividend yield of 2%. In last 52 weeks, TIF has traded within the range of $49.72 to $74.20. The company recently extended its share repurchase program by one year the deadline for which will end on 31^st January 2014 with approx of $164 million available for the repurchase. For the year financial year 2012 the Company expects a revenue growth of 6% – 9%

Nordstrom Inc. (NYSE:JWN) – Nordstrom is a fashion specialty retailer, offering apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It operates in two segments, Retail and Credit Retail segment offering a selection of brand names and private label merchandise. The credit segment operates a federal savings bank which offers private label credit card, visa credit cards and debit cards. In its latest reported results, the company recorded net sales of $11.8 billion for the year 2012 which is an 12 per cent increase and an diluted earnings per share of $3.56. The company operates on profitability margin of 6.05% with ROE of 38%. JWN shares currently trade around $54 with P/E of 15.24 and EPS of 3.54. In last 52 weeks the stock has traded within the range of $46.27 and $58.44

By 2016 the Company plans to double their Nordstrom Rack Stores from currently 15 stores

Michael Kors Holdings Ltd.(NYSE:KORS)- The company engages in design, marketing distribution and retail of its brands like Michael Kors, MICHAEL KORS, MICHAEL MICHAEL KORS, and KORS MICHAEL KORS. The company had revenues of $1,584.6 million for the nine months ended 29^th December 2012. For the whole year the company expects its revenues to be around $2.1 billion with diluted earnings per share to be in the range of $1.80-$1.82. Currently the company is trading around $60 with P/E ratio of 35.69 and EPS of 1.70.

V.F. Corporation (NYSE:VFC)- The company designs manufactures and sources from independent contractors various apparel and footwear products primarily in United States and Europe. The company’s recently reported results for the year 2012 showed revenues of $10.9 billion with adjusted EPS of 9.70. The gross margins of the company grew by 75 bps to 46.5%. For 2013, the company expects an increase in the sales by 6% and an increase of 100 BPS in the gross margins. The company along with Altmount Capital Partners has shown interest in acquiring the shares of Billabong International Limited (Australian company) which in accordance with VF Corporation’s intend to pursue acquisitions in Action sports category.

The stock is presently trading around $163 with P/E ratio of 16.92 and EPS of 9.71. Indicated annual dividend Rate for the company is $3.48. The Beta Coefficient of the company is 0.93.

SAKS Incorporated (NYSE:SKS)- The company operates retail stores in USA offering assortment of fashion apparel, shoes, accessories, jewelry, cosmetics and gifts. The company operates stores under the brand name of SAKS Fifth Avenue (SFA) operating in upscale regional malls and SAKS Fifth Avenue OFF 5^TH(OFF 5^TH) operating in upscale mixed use and off price centers. The company operates 43 SFA stores and 64 OFF 5^TH Stores. In the recently reported full year results the company reported an increase of 4.4% in full year sales, net income of $62.8 million or $0.41 diluted earnings per share. One of the major factors affecting the sales of the company was Storm Sandy since SAKS has stores concentration in New York.

The future plans of the company include stores expansion with plans to add 7 new 5^TH OFF stores, 2 new full line stores are also being planned and may open by 2015. The company also has many initiatives underway to attract new customers and plans to increase its customer base. The company is implementing a Project Evolution which aims at overhauling its existing merchandise, finance and human resources. The company is trimming its portfolio to focus more on resource utilization and realizing value in real estate by choosing to systematically close its SFA stores (10 stores have been closed since 2010). These changes may have a negative impact on the revenues of 2013 but in long term the company stands to benefit a lot from these changes.

The stoock is presently trading around $11 per share with P/E of 24.72 and EPS of 0.45

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