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Uber-Wealthy First To Feel Price Pass-Throughs As Tiffany's Raises Prices On Most Jewelry Products, Complains About Dropping Margins

Tyler Durden's picture





 

While so far the broader US consumer has been insulated from the surge in commodity input prices as supermarkets and retailers continue to believe that things will normalize, and nobody is desperate enough yet to be the first to defect from what has been a comfortable deflationary game theoretical equilibrium (except for the now bankrupt Great Atlantic and Pacifics of the world...it's too late for them), this is no longer the uniform case. Tiffany's has just announced it is raising prices on "most of its jewelry in the last couple of days in a move to help offset higher precious-metal and diamond costs." Dow Jones reports that increases depend on what metals are in the jewelry, a spokesman said, but are not commensurate with the metal-price jumps last year. He declined to be more specific. TIF feels customers are likely to find the moves more palatable than in 2009, when the company didn't raise prices despite higher costs because of the recession. Margins fell as a result. In other words exactly as we have been predicting for almost a year now, as we have been anticipating the liquidity driven inflation now gripping virtually every single commodity.

And with Tiffany's leading the charge, expect this move to be imitated as copycat retailers (many of whom are still stuck with massive excess inventory) finally take the plunge and follow through with a move that is sure to blow up not only margins in the short and long run, but earnings and as a result, earning multiples. The biggest loser of course, will be the US middle class which between energy, food and now discretionary price increases will not be able to fund the difference even factoring in the fact that nobody actually pays their mortgage any more.

 


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Tue, 01/18/2011 - 15:38 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Slowing sales at Tiff's will surely cause gold to rally.

Tue, 01/18/2011 - 15:48 | Link to Comment Richard Weed
Tue, 01/18/2011 - 16:26 | Link to Comment Arius
Arius's picture

loved the frenemies phrase...welcome to the New World - w/ frenemies...

Tue, 01/18/2011 - 15:48 | Link to Comment TruthInSunshine
TruthInSunshine's picture

It's all good.

American retailers will just have to move all of their stores to either Manhattan or the better areas of the D.C.-Virginia government worker and contractor corridor.

Tue, 01/18/2011 - 16:21 | Link to Comment chet
chet's picture

And then to China and the UAE.

Wed, 01/19/2011 - 01:00 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture
Platinum is Dominating Platinum is making all markets look stupid.  Best to run to Tiffany, or at least do your shopping on line.  Every pretty lady should have a key around their neck, and why not make it platinum.  The less is bought for shiny the more is used industrially.  Medical equipment uses it, and cars will use it too.  Platinum is past its peak production level which came in 2009.  Today it reflected all these reasons in its price action.

After her sister meatls took a hit today platinum settled from her breakout and cascaded lightly back to $1800.  I have writ for quite some time about the $1800 level and that it would be the next breakout point for all four of the horsemen (Trinity plus oil).  Once platinum gets moving past $1800 look out for $2500.  It will be just around the corner. Thursday, January 13, 2011

Tue, 01/18/2011 - 15:39 | Link to Comment Gully Foyle
Gully Foyle's picture

Holly Golightly: Oh, golly gee damn!

Tue, 01/18/2011 - 15:40 | Link to Comment unwashedmass
unwashedmass's picture

 

ah yeah, these guys have to produce actual gold and silver, their clients won't take a paper replica of the metals. they should talk to JPM about how to try and change that, doncha think?

meanwhile, so, i was thinking back....does anyone else remember when stocks actually went up and down? the days when a broke company didn't have a skyrocketing stock?

kinda hard to picture that sort of thing now, isn't it?

Tue, 01/18/2011 - 15:40 | Link to Comment Running on Empty
Running on Empty's picture

Zzzzzzzzzzz.

Tue, 01/18/2011 - 15:40 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

Screw the little people.  That just means more diamond encrusted jock straps for the rest of us.

Tue, 01/18/2011 - 15:42 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

And you're still wearing the diamonds on the outside?

Tue, 01/18/2011 - 15:58 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

Well, sure, when I'm not smuggling them of course.

Tue, 01/18/2011 - 15:41 | Link to Comment unky
unky's picture

Who wants jewelry anyway when u can buy nice coins and bars of precious metals.

Tue, 01/18/2011 - 15:44 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Because the price of coins and bars are going down? Just sayin

Tue, 01/18/2011 - 15:49 | Link to Comment homersimpson
homersimpson's picture

What's next - a graph showing the timeline of gold for a whoppin' 4 weeks? Yes.. coins and bars are going down big *rolls eyes*.

Tue, 01/18/2011 - 18:58 | Link to Comment trav7777
trav7777's picture

girls don't like wearing bars

Tue, 01/18/2011 - 15:41 | Link to Comment DeweyLeon
DeweyLeon's picture

Filed under: Shit I'd never buy from a store I'd never buy from. (move over Walmart/Best buy)

Tue, 01/18/2011 - 17:32 | Link to Comment Mudflap
Mudflap's picture

They want to set themselves up as the 'rich and stupid' people's shopping center?  Ok by me.  While I might not buy from them I'd sure as hell sell to 'em!

Filed under: 'What inflation?'

 

Tue, 01/18/2011 - 15:45 | Link to Comment Lower Class Elite
Lower Class Elite's picture

I really wish Amy Calistri or whatever her name is didn't have that fucking hat on.  It's driving me crazy, and not in a good way.

Tue, 01/18/2011 - 16:23 | Link to Comment chet
chet's picture

Yeah, that is a really terrible hat.

Tue, 01/18/2011 - 15:43 | Link to Comment unwashedmass
unwashedmass's picture

 

so, clearly we have a crowd that already knows what Apples' earnings will be....this run up today seems almost frantic....

frankly my screens haven't been this busy in weeks......does anyone else think this might be the last gasp push?

Tue, 01/18/2011 - 16:00 | Link to Comment hbjork1
hbjork1's picture

It has some of that feeling. 

Time for that gradual shift to things that China(and the world) might want to buy?   BA (They are eventually going to get it right.)  Food sources and fertilizer?.  And since the government will need to feed the nation (or else), rail and trucking?

Buffet be praised?

Tue, 01/18/2011 - 16:19 | Link to Comment unwashedmass
unwashedmass's picture

there is movement in the out of the money puts now in AAPL. someone knows. i bought these penny puts this morning,,,, and they are moving....what do you know.

well, how bad is this crash/correction going to be? hold the 1200? given we haven't had any real buying since late october, that could be dicey...

Tue, 01/18/2011 - 15:44 | Link to Comment gwar5
gwar5's picture

Diamonds, Bitchez!

Tue, 01/18/2011 - 16:13 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Diamond studded platinum and white gold keys, bitchez!

Tue, 01/18/2011 - 15:46 | Link to Comment Bruno the Bear
Bruno the Bear's picture

Holly Golightley is going to be pissed!

"He's all right! Aren't you, cat? Poor cat! Poor slob! Poor slob without a name! The way I see it I haven't got the right to give him one. We don't belong to each other. We just took up one day by the river. I don't want to own anything until I find a place where me and things go together. I'm not sure where that is but I know what it is like. It's like Tiffany's."

 

Tue, 01/18/2011 - 15:49 | Link to Comment buzzsaw99
buzzsaw99's picture

Cadmium bracelets at Wally are higher also.

Tue, 01/18/2011 - 15:48 | Link to Comment Richard Head
Richard Head's picture

Tiffany is not for the "uber-wealthy."  It is for the "aspirational rich."

Tue, 01/18/2011 - 15:50 | Link to Comment TruthInSunshine
TruthInSunshine's picture

+ Ben Bernank's House of Rare & Precious Coins is where the truly wealthy shop.

Tue, 01/18/2011 - 15:54 | Link to Comment Bruno the Bear
Bruno the Bear's picture

Wonder if there will be much use for this trinket in the future -

http://www.harrywinston.com/Product.aspx?alias=tb-money-clip

Tue, 01/18/2011 - 15:58 | Link to Comment Misstrial
Misstrial's picture

+1

This is true. Tiffany's is for the aspirational level.

~Misstrial

 

Tue, 01/18/2011 - 16:04 | Link to Comment andybev01
andybev01's picture

better nouveau than no...

Tue, 01/18/2011 - 16:56 | Link to Comment Misstrial
Misstrial's picture

Yes, however nouveau is not the same as aspirational.

Aspirational is trying to get to nouveau.

Nouveau is better than not riche at all. :)

~Misstrial

Tue, 01/18/2011 - 17:08 | Link to Comment JW n FL
Tue, 01/18/2011 - 17:56 | Link to Comment Misstrial
Misstrial's picture

No, just splainin'.....

Unless family wealth going back 7 generations is nouveau, if so, then "yes."

~Misstrial

Tue, 01/18/2011 - 15:50 | Link to Comment Sudden Debt
Sudden Debt's picture

 

NEXT UP:

MISTRESSES UNEMPLOYMENT SKYROCKETS DUE TO INFLATING MAINTENANCE COSTS!!

 

 

Tue, 01/18/2011 - 15:59 | Link to Comment monopoly
monopoly's picture

sudden debt. You are too much. "Mistress unemployment" LMAO!!!

Tue, 01/18/2011 - 16:58 | Link to Comment Misstrial
Misstrial's picture

lol...actually the rumor is that older women flip through the advertisers and editorial in Vogue and Bazaar to see what hubby is buying for the mistress....

~Misstrial

Tue, 01/18/2011 - 17:07 | Link to Comment Logans_Run
Logans_Run's picture

...or is it look at the photos of models to see which mistress hubby is buying?

Tue, 01/18/2011 - 20:23 | Link to Comment andybev01
andybev01's picture

Only if they have surpassed 'aspirational'.

Wed, 01/19/2011 - 10:07 | Link to Comment Drag Racer
Drag Racer's picture

does this count??

http://1.bp.blogspot.com/_p1pt_LXqSz8/TPt-V07hmtI/AAAAAAAAAwg/qDXXXlxCaA...

 

who is next up for volleyball?

Tue, 01/18/2011 - 18:59 | Link to Comment Freddie
Freddie's picture

Good thing Apple hit their numbers or more of those mistress bitchez would be out in the street.    Somebody better clone Jobs fast or these mistresses will be back to doing porn.

Tue, 01/18/2011 - 15:51 | Link to Comment homersimpson
homersimpson's picture

Why buy diamonds when you can buy purer ones generated by machines for much less... The De Beers folks would never artifically prop up the price of diamonds, would they?!

Tue, 01/18/2011 - 16:01 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

Why have De Beers when you can have a Schlitz? DOH!

Tue, 01/18/2011 - 16:02 | Link to Comment hbjork1
hbjork1's picture

Recommended sources?

Tue, 01/18/2011 - 16:30 | Link to Comment squexx
squexx's picture

Of course not! Jooz would never lie, steal, cheat or manipulate! They are the shining light on the hill! (NOT!!)

Tue, 01/18/2011 - 15:52 | Link to Comment israhole
israhole's picture

Not enough wiggle room in those 400% margins.

Tue, 01/18/2011 - 15:56 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

Po' folk can go to the mall and buy stainless jewelry. I saw that for the first time the other day; kinda made me want to wear a fork around my neck on a bicycle chain. But not much. Beware of magnets, bitchez.

Tue, 01/18/2011 - 15:59 | Link to Comment Dick Darlington
Dick Darlington's picture

lol

Tue, 01/18/2011 - 15:57 | Link to Comment Michael Victory
Michael Victory's picture



the little blue box.
help.


~V

Tue, 01/18/2011 - 15:58 | Link to Comment Seasmoke
Seasmoke's picture

the baby blue boxes do not look as special any more

Tue, 01/18/2011 - 15:59 | Link to Comment lsbumblebee
lsbumblebee's picture

This could lead to an expansion of kleptomania research clinics, and that's good for the economy.

 

Tue, 01/18/2011 - 16:02 | Link to Comment Caviar Emptor
Caviar Emptor's picture

This is Trickle-Down economics in action! Only this time it's inflation that trickles. One by one all those who were reluctant to raise prices will be forced to do so, despite the futility of higher prices in the face of constrained consumers. And it's starting at the top of the echelon with TIffany's, because they have a bit more leeway with their wealthy client base. But soon the urge to raise prices will trickle down through every level. Of course everything below the uber-wealthy are constrained by Biflation: their cost of living is rising at a time when their incomes are not. This even applies to people with 7 figure incomes. The middle class with declining employment and housing will have no where to run. 

The TrickleMe! Economy is falling flat on it's a$$

Tue, 01/18/2011 - 16:31 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

Like I said 6 month ago...inflation on the rich.

Whether it's rooms at the Wynn, $200 dinners, business class tickets to Hong Kong, or places for them to invest, the rich will feel inflation first because their world has recovered faster than the poor or middle class world.  Within the sphere of the rich, money has a completely different velocity than among the middle class or poor.  

It's easier for Wynn to charge $240/dinner rather than $200, compared to McDonald's trying to charge $1.20 for something that was formerly a buck.   

 

Tue, 01/18/2011 - 16:03 | Link to Comment What_Me_Worry
What_Me_Worry's picture

I thought with the amount tiffany's marks up their silver that they would never be able to be squeezed into worrying about input costs.

Things must really be looking bad.

Tue, 01/18/2011 - 16:04 | Link to Comment djsmps
djsmps's picture

"While so far the broader US consumer has been insulated from the surge in commodity input prices as supermarkets and retailers continue to believe that things will normalize..."

You are kidding, right? I am actually shocked at grocery prices now. Everything is way up.

Tue, 01/18/2011 - 16:06 | Link to Comment john milton
john milton's picture

wealth effect at its best...

Tue, 01/18/2011 - 16:07 | Link to Comment Captain Willard
Captain Willard's picture

I think Tiffany is on LIFO accounting, which makes their stated earnings more immediately sensitive to this price run-up in metals. By the way, I believe they make a lot more money (gross profit margin) selling silver than anything else. The big increase in silver prices has to be hurting them a lot.

Tue, 01/18/2011 - 17:21 | Link to Comment Peterpaul
Peterpaul's picture

Darn right Tiffany's makes a huge gross profit on the silver goods. By my office in Buckhead is a coin dealer/estate jewelry shop. It is a new location for a company that has operated in Atlanta for 30 plus years. The shop sells silver jewelry at essentially spot price of the metal plus 5%. I looked at a genuine Tiffany's bracelet (guaranteed as I brought a real, borrowed piece to compare it with side by side and the two matched). The tiffany's bracelet sold for about $335 new. The same cost $60 at the shop.

 

With that kind of mark up they can afford to advertise.

 

Needless to say, my wife now sports an elegant, weighty, if used, Tiffany's bracelet.

 

 

Tue, 01/18/2011 - 19:15 | Link to Comment trav7777
trav7777's picture

It's Tiffany.

Every girl knows what that is.  I have a sometime gf who was an ex print model for banana republic and whose billboards were apparently on the sides of buildings in NYC.  According to her TIF is considered very high prestige, apparently; I always thought that it was kitschy, but evidently it has a pretty good rep.  I've subsequently learnt that it is a great zero-thought gift for a girl.  You simply can't go wrong with it.  "Just silver" doesn't cut it; it's the way women think.

That's how LV can sell shit for what they do, even charging Kiton or Brioni prices for junk belts.  It's a brand, like TIF, with a following.  Apparently, TIF is up there with the other design houses, even exceeding them in a lot of regards.  And I've got to admit that the stuff is pretty nice...there's a TIF store next to a Hermes and Gucci around here and the TIF products look classier and nicer to me.  I will patronize them because it's an american brand. 

Girls definitely have a brand hierarchy and TIF is at or near the top.  It's like having a Rolex watch or Gucci sunglasses, you're in the catbird status seat until someone shows up with a Patek and Chrome Hearts (seriously these glasses bitchslap anything for rockstar effect)

Tue, 01/18/2011 - 16:16 | Link to Comment velobabe
velobabe's picture

well, this is really bad news for all the italian men having affairs with hookers or whores. the price of guilt just went up. BTW, no one told me what the difference was between a hooker and a whore! Tiffany's suck, i know quality and never saw much in a Tiffany store. i do have an old old old blue box. probably from my mother, from the 50's when class meant something. jewelry handed down, not money.

 

Tue, 01/18/2011 - 17:09 | Link to Comment JW n FL
JW n FL's picture

lil blue boxes can fix almost anything... but to be clear... when I think of tiffany's... i get gift bag for some reason?

Tue, 01/18/2011 - 17:27 | Link to Comment velobabe
velobabe's picture

****************************************************

Tue, 01/18/2011 - 19:30 | Link to Comment JW n FL
JW n FL's picture

no, just normal (season) party bags...

Tue, 01/18/2011 - 16:18 | Link to Comment Piranhanoia
Piranhanoia's picture

Hilarious, a business with a 1000% profit margin raises prices on rocks to sell to folks as smart as rocks. 

Tue, 01/18/2011 - 16:21 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

BUY THE RAPE!

Tue, 01/18/2011 - 16:21 | Link to Comment Sofa King
Sofa King's picture

You pay a premium for a Blue Box until you realize what's inside is just Shit. Hell, I once bought a watch from Harrod's just to say I got one from there and I could have bought the damn thing online for half the price.  Live and learn.

 

Tue, 01/18/2011 - 16:57 | Link to Comment topcallingtroll
topcallingtroll's picture

This is actually how inflation starts in wealthy economies. It starts with discretionary spending.

Tue, 01/18/2011 - 17:03 | Link to Comment Logans_Run
Logans_Run's picture

So they decided to not go with the .75 carat in a 1.0 carat package, similar to Walmart on 12 ounces of coffee for the former 16 ounce price? Must be nice to be in a place where you actually have some price elasticity!

Tue, 01/18/2011 - 17:34 | Link to Comment jeffca
jeffca's picture

Middle class does not exist in US, there is the top 20% and bottom 80%.

The bottom 80% is indebted and can't spend. 

The plutocracy now will now fight each other.

There can only be 1.

Tue, 01/18/2011 - 18:49 | Link to Comment waterhorse
waterhorse's picture

I'd rather have one of the original hanging lotus lamps.

Tue, 01/18/2011 - 19:18 | Link to Comment 1Fatboy
1Fatboy's picture

I noticed this the other week Christmas shopping.  Braclet @ the link was $5500, Christmas 2009...12 months later: $7500.

http://www.tiffany.com/Shopping/Item.aspx?fromGrid=1&sku=18116812&mcat=1...

 

 

 

Tue, 01/18/2011 - 20:28 | Link to Comment andybev01
andybev01's picture

wow.

Nothing screams class like a formless shackle of (presumably) solid gold.

*rolls eyes*

Tue, 01/18/2011 - 21:04 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

LOL.  Priceless...gold shackle.

Tue, 01/18/2011 - 21:15 | Link to Comment dark pools of soros
dark pools of soros's picture

with silver chains???

Tue, 01/18/2011 - 21:13 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

Well, I'd say "oh, for God's sake, cry me river" if I wasn't so busy puking all over the place about the grotesqueness of the waste. Just when you think you've seen it all.......

Tue, 01/18/2011 - 23:08 | Link to Comment Buck Johnson
Buck Johnson's picture

It's seeping into the regular lexicon of speech in American finance.  Value deflation/food inflation (which are tied) which they try to hide, market manipulation of resources like gold and silver and others, etc. etc. etc..  This inflation cancer has metastasized to the point that it's being seen everywhere now, and it's just the start.  This is the insidious trap of trying to stop stagnation and control inflation, trying to cure one can be the poison for the other.  So they have been trying to walk a very thin line hopeing that they can walk us through this problem, the problem is the trap is letting you continue to believe you have it under control and continue to print money.  And when you keep going along that thin line at about the halfway mark you start to see the line bend and then break.  Because while you print you gain and the thin line can't support your continued increase in money weight and so you fall into the morass of Hyperstagflation.

The trap is making you ensnare yourself.

Thu, 01/20/2011 - 18:59 | Link to Comment ffart
ffart's picture

The question is if they can push spot silver down to $10 again and the coin market follows, will I be able to get my U-haul truck to the coin store before the other suckers realize they've been had???

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