So much of the market is correlated with the larger economy that it becomes difficult for retail and institutional investors to find something that acts differently but still doesn’t represent a pure safety play like bonds or utilities stocks. The upside is either fully on or fully off. And the correlation becomes the game.
However, there’s one space that offers an interesting angle that promises to add new dimensions to the jigsaw puzzle: Luxury goods stocks.
The luxury space is highly cyclical, or so you might think. However, over the long run, this turns out not to be the case. In fact, luxury goods consumers – above a certain threshold, are almost completely immune to the standard cycle that defines the economic reality for most of us. That makes the space particularly interesting for growth, diversification, speculation, and defense. All at once. It’s a necessary piece of the investment puzzle.
With that in mind, we take a look at a selection of interesting stocks with champagne wishes and caviar dreams: LVMH Moet Hennessy Louis Vuitton SA Unsponsored ADR (OTCMKTS:LVMUY), Tiffany & Co. (NYSE:TIF), Tapestry Inc (NYSE:TPR), and Clikia Corp (OTCMKTS:CLKA).
LVMH Moet Hennessy Louis Vuitton SA Unsponsored ADR (OTCMKTS:LVMUY) is represented in Wines and Spirits by a portfolio of brands that includes Moët & Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Krug, Ruinart, Mercier, Château d’Yquem, Domaine du Clos des Lambrays, Château Cheval Blanc, Colgin Cellars, Hennessy, Glenmorangie, Ardbeg, Belvedere, Woodinville, Volcán de Mi Tierra, Chandon, Cloudy Bay, Terrazas de los Andes, Cheval des Andes, Cape Mentelle, Newton, Bodega Numanthia, Ao Yun and Château du Galoupet.
Its Fashion and Leather Goods division includes Louis Vuitton, Christian Dior Couture, Celine, Loewe, Kenzo, Givenchy, Pink Shirtmaker, Fendi, Emilio Pucci, Marc Jacobs, Berluti, Nicholas Kirkwood, Loro Piana, RIMOWA, Patou and Fenty. LVMH is present in the Perfumes and Cosmetics sector with Parfums Christian Dior, Guerlain, Parfums Givenchy, Kenzo Parfums, Perfumes Loewe, Benefit Cosmetics, Make Up For Ever, Acqua di Parma, Fresh, Fenty Beauty by Rihanna and Maison Francis Kurkdjian.
LVMH’s Watches and Jewelry division comprises Bvlgari, TAG Heuer, Chaumet, Dior Watches, Zenith, Fred and Hublot. LVMH is also active in selective retailing as well as in other activities through DFS, Sephora, Le Bon Marché, La Samaritaine, Groupe Les Echos, Cova, Le Jardin d’Acclimatation, Royal Van Lent, Belmond and Cheval Blanc hotels.
LVMH Moet Hennessy Louis Vuitton SA Unsponsored ADR (OTCMKTS:LVMUY) recently announced that approval was given for the payment of a dividend for financial year 2019 of 4.80 Euros per share.
Taking into account the 2.20 Euros paid on Tuesday, December 10, 2019, the balance of 2.60 Euros will be paid on Thursday, July 9, 2020. The last trading day with dividend rights is Monday, July 6, 2020.
If you’re long this stock, then you’re liking how the stock has responded to the announcement. LVMUY shares have been moving higher over the past week overall, pushing about 3% to the upside on above average trading volume.
LVMH Moet Hennessy Louis Vuitton SA Unsponsored ADR (OTCMKTS:LVMUY) managed to rope in revenues totaling $28.6B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 24.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($6.4B against $22.6B, respectively).
Tiffany & Co. (NYSE:TIF) promulgates itself as a company that, through its subsidiaries, designs, manufactures, and retails jewelry and other items. The company offers jewelry collections, engagement rings, and wedding bands. It also sells watches, home and accessories products, and fragrances; and wholesales diamonds and earnings.
The company sells its products through retail, Internet and catalog, business-to-business, and wholesale distribution channels. As of January 31, 2020, it operated 124 stores in the Americas, 91 stores in the Asia-Pacific, 58 stores in Japan, 48 stores in Europe, and 5 stores in the United Arab Emirates. Tiffany & Co. was founded in 1837 and is headquartered in New York, New York.
Tiffany & Co. (NYSE:TIF) just reported its financial results for the three months ended April 30, 2020. Worldwide net sales as reported and on a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars were below the prior year primarily as a result of the temporary closures of a substantial number of the Company’s stores around the world due to the COVID-19 pandemic.
Unlike calendar year-end companies, the Company’s first quarter began February 1, meaning that the COVID-19 pandemic affected its entire quarter. The significant decline in net sales resulted in a net loss in the quarter.
Worldwide net sales declined 45% to $556 million and comparable sales declined 44%; on a constant-exchange-rate basis, net sales declined by 44% as compared to the prior year and comparable sales declined 43%. These sales declines reflected closures of Company retail stores across all of its global markets at various times during the first quarter of 2020 due to COVID-19.
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week. TIF shares have been relatively flat over the past month of action, with very little net movement during that period.
Tiffany & Co. (NYSE:TIF) managed to rope in revenues totaling $555.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -44.6%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.1B against $1.3B, respectively).
Tapestry Inc (NYSE:TPR) frames itself as a company that provides luxury accessories and branded lifestyle products in the United States, Japan, China, Hong Kong, Macau, Europe, Canada, Taiwan, South Korea, Malaysia, Australia, New Zealand, and Singapore.
The company operates through three segments: Coach, Kate Spade, and Stuart Weitzman. It offers women’s accessories, including handbags, such as wallets, money pieces, wristlets, and cosmetic cases; novelty accessories comprising address books, time management accessories, travel accessories, sketchbooks, and portfolios; key rings; and charms.
The company sells its products to consumers through a network of Coach, Kate Spade, and Stuart Weitzman operated stores, including the Internet and concession shop-in-shops; and wholesale customers, as well as through independent third-party distributors.
Tapestry Inc (NYSE:TPR) recently announced its partnership, through its Coach brand, with More Than A Vote, a new voting rights organization led by LeBron James and a coalition of Black athletes and entertainers aimed at combating voter suppression and misinformation that disproportionately disenfranchises communities of color.
“The foundation of democracy is the right to vote,” said Jide Zeitlin, Chairman and Chief Executive Officer of Tapestry, Inc. and Interim CEO of the Coach Brand. “America cannot resolve systemic racism and inequality without ending voter suppression. We are proud to partner with More Than A Vote and to work toward equal access to the ballot box for every single eligible American.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. TPR shares have been moving higher over the past week overall, pushing about 8% to the upside on above average trading volume. TPR shares have been relatively flat over the past month of action, with very little net movement during that period.
Tapestry Inc (NYSE:TPR) managed to rope in revenues totaling $1.1B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -19.4%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($898.2M against $1.1B, respectively).
Clikia Corp (OTCMKTS:CLKA), while clearly a more speculative name on this list, deserves to be there as far as we can tell. The company changed hands in April, pursuant to which Mr. Anil Idnani became the controlling shareholder and sole officer and director. Following such change-in-control transaction, in May 2020, the company went on to acquire all of the assets, including the going business, of Maison Luxe, LLC, a Delaware limited liability.
This model was laid out further in a Shareholder Letter put out by the company last week. The communication notes that the company’s new management and its new subsidiary have extensive experience in the “rare custom luxury goods market”, including a wide network of customers and distributors already in place:
“We are already harnessing a robust network and extensive experiential assets that come with the bargain in this transition – including a great deal of experience centered in the rare custom luxury goods market. It is a peculiar niche business context with its own rules governing a unique microeconomic landscape.”
Clikia Corp (OTCMKTS:CLKA) just updated its shareholders on the Company’s progress as a supplier to the Duty-Free luxury goods marketplace. The Company’s wholly owned subsidiary, Maison Luxe, has forged relationships with four (4) individual duty-free sellers, which have already made aggregate purchases in excess of $300,000 in custom luxury timepieces from the Company. These are ongoing distribution relationships.
According to the release, the sellers are located in duty-free ports in Alaska, the US Virgin Islands, and Colorado. The Company is currently in talks to expand both in terms of volume of timepieces and in product category, to include fine jewelry. Management believes the establishment of additional funding will allow the Company to expand its own inventory and widen margins through volume sourcing, where possible. This will open up access to additional duty-free sellers in ports where the Company has already established relationships and a reputation for credibility, quality, and reliability.
“The idea is to grow a brand that sources retail markets with responsibly sourced and priced watches,” remarked Anil Idnani, CEO of Clikia and Founder of Maison Luxe. “That’s typically nearly impossible to find. This is now more the case than ever due to a supply shock as factories shut down or halt production of luxury goods. However, demand hasn’t dropped at all this year despite the health crisis and resulting economic turbulence. The result is rising prices on inventory we have in-house.”
Clikia Corp (OTCMKTS:CLKA) is already publicly talking about being on pace for over $2M in revenues in 2020 with its new business now firing apparently on all cylinders. That suggests upcoming financial filings will represent a qualitative shift from currently available records, which refer to the pre-pivot reality for the company.
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