It was the best of times, it was the worst of times. This aptly describes what is going on in the economy although we only really hear about the latter part. All day, every day, we get reports about how weak the economy is, but that isn’t the full story. A recent earnings report from Tiffany’s (TIF) shows how the rich are doing just fine and still spending like crazy.
Tiffany’s surged over 9% after reporting sting earnings and raising full-year guidance. The company earned 86 cents per share in its second quarter, easily beating estimates of 70 cents per share. Revenues also beat views and soared 30% over last year. Even more impressive in my opinion was that same store sales grew 22% over last year.
Michael J. Kowalski, chairman and chief executive officer, said, “We are extremely pleased by these results which confirm the growing global appeal of Tiffany’s product offerings. In addition, we have been able to absorb precious metal and gemstone cost increases while improving our gross and operating margins.”
Results Speak Volumes
I am not recommending Tiffany’s per se, but the fact that they can churn out results like this in the kind of economy we are experiencing is remarkable and says a lot about consumers. Those who have money will spend in any environment. That is the take home message I got from these results. Obviously diamonds and jewelry are not necessary items, and cost a pretty penny. The high end consumer is alive and well.
Other high-end retailers must have loved this report as it showed the end demand for their products is strong despite broader economic weakness. This might improve investor sentiment to the group as a whole and dispel widespread fears that even the rich are pulling back their spending. Judging by this report, the top portion of consumers are still partying hard.
A Tale Of Two Economies is an article from: 
