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Takeaway: TIF traffic trends decelerate in 3Q. Rare spike in both ICSC/Redbook, compares easy until Black Friday / Dec, which is what really matters.

TIF - E-comm Traffic Trends Decelerate in 3Q

TIF just closed the books on 3Q, and the traffic trends headed out of the quarter look particularly weak. E-commerce accounts for just 6% of total sales for the company -- but because the average ticket for TIF sits at $750 there is a lot less impulse and a lot more planning before a consumer slaps down a credit card and walks away with a blue box. The metric, which looks at the relative strength of an e-commerce site relative to the internet in aggregate takes into account two metrics (unique visitation and page visits per user), decelerated from +10% YY at the end of the 2nd quarter to -5% at the end of 3Q with marked softness throughout the quarter.

Not a good barometer for brand strength in 3Q, especially when the common perception seems to be that “just because Tiffany (TIF) blew up earlier this year, it can’t blow up again.” We disagree. It actually blew up twice this year. And we think there will be another. Next year's estimates are sitting at $4.54. We think an optimistic number is $4.25. If our Macro team's bearish call plays out according to plan, TIF will be lucky to earn $4.00.

With productivity, margins and returns all near 10-year highs, and the stock trading at 19x a number we don't think is doable, we still like this one on the short side.

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart1

RETAIL sales Trends (ICSC / RedBook) - a rare spike in both indices, which happened on the same day LB put up a big comp (3Q at ~7% vs 5% expectations). On the heels of a lot of negative sentiment around retail, this offers up a 1-day reprieve. Note, however, that comps are very easy through most of November -- until Black Friday and December, which is what really matters.

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart2

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart3

Retail Callouts (11/3): TIF E-comm Traffic, Retail Sales Trends, LB - 11 3 2015 chart4

LB - L Brands Reports Oct. Comp #s, Takes Up 3Q Ahead Of Investor Day


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