Keith and our Macro team are making a compelling call on buying the high-end consumer. Also note Steiner/Drake’s call yesterday on Realogy (RLGY) – a play on higher-end Housing (ping for details on both/either). Then why in the world are you short TIF McGough?
This is about duration… but I’m not going to sit here short a name that has not comped for 9 quarters that could put up a positive number when our Macro team is proved right. I’m kicking it down to our Short Bench. Here’s something to chew on…
This is about bridging TRADE/TREND/TAIL.
My TAIL call is that the Tiffany brand is losing share at an accelerating rate, and new management’s only way to fix the brand is to meaningfully up the ante on SG&A and Capex. What it has announced re investment so far is too little, too late. In the meantime you’ve got peak margins and peaky multiple and an activist, well…being active. BUT…
As this ‘high-end accelerating’ call works, TIF could, and probably will, accelerate comps even if still losing share. My sense there is that it will give management confidence that Krakoff and Farrah (Board) are already fixing this company double-handedly. This will allow the mgmt team/Board to remain in denial about a Brand problem, and ease off the accelerator on SG&A and Capex. That’s what makes activists money AFTER a management change – not doubling down on investment and taking down earnings (even if the right long term call).
The point here is that high-end acceleration, and the head-fake masking the Brand problem will likely make this a Best Idea short when the Facts and Research Call change.
