Tiffany & Co.’s (NYSE: TIF) stock is up 31% over the past five years, compared to a rise of 50% for the S&P 500. If it were not for an offer to buy the firm from luxury conglomerate LVMH, Tiffany’s share price for the period actually would be flat. Financially, Tiffany is not a very good company.
In the first half of the year, Tiffany’s revenue was $2.1 billion, down 3% year over year. Same-store sales were off 4% for the same period. Net income fell 9% to $261 million. Among other things, Tiffany has poor margins. At the same time, management said demand has slowed and growth could falter further.
Tiffany announced the bid and its official response. Most experts believe it will turn it down and look for a better sale price.
Tiffany & Co. (NYSE:TIF) today confirmed it has received an unsolicited, non-binding proposal from LVMH Moet Hennessy – Louis Vuitton to acquire Tiffany for $120 per share in cash.
While the parties are not in discussions, Tiffany’s Board of Directors, consistent with its fiduciary responsibilities, is carefully reviewing the proposal, with the assistance of independent financial and legal advisors, to determine the course of action it believes is in the best interests of the Company and its shareholders. Tiffany shareholders need take no action at this time.
Tiffany is successfully executing on its business plan and remains focused on achieving its goal of becoming The Next Generation Luxury Jeweler.
Investors should take the money and run. Tiffany is running out of steam.