Summary
There is no rational explanation for the recent 20% drop in Tiffany’s stock from its all-time highs.
China has not raised tariffs on jewelry: instead, it just reduced them.
The dreaded strict controls on personal goods imported into China by personal shoppers are actually good news for global luxury brands.
Tiffany is almost certainly repurchasing its stock, taking advantage of Mr. Market’s irrationality, and the company will continue to pursue its growth goals during the holiday season.
After an exciting start of the year, thanks to the excellent results that the growth plan of the new Tiffany & Co (NYSE:TIF) CEO is already delivering, the common shares of the New York City’s jewelry company have suffered a sharp decline in the last two months, losing more than 20%, as of this writing.
Mr. Market seems terrified at the idea of tighter regulation on the luxury goods imported by China using platforms such as Daigou, as noted by Jean-Jacques Guiony during the last Louis Vuitton Moet Hennessy (OTCPK:LVMHF) conference call, which, nevertheless, presented reassuring results, with sales and profits up 13% in the previous 9 months (16% in China).
Curiously, investors did not grasp L. Vuitton’s CEO’s message entirely. He pointed out that his company has always been against the practice of purchases on commision, so widespread in China, to the point of (wait for it):
