Economic confidence and inflation expectations are both at multi-decade highs right now according to a series of surveys by Bank of America.
The pandemic was awful, but it clearly had massive economic repercussions for those in socioeconomically disadvantaged circumstances, while posing very few negative effects, economically and financially, for the professional class or those with careers in 21st century industries.
As a result, we have a classic K-shaped recovery, where the poor get poorer, and the rich get richer. To help combat that, we have seen an unprecedented response from fiscal and monetary policymakers. However, this has benefitted even those who probably didn’t really need that level of support.
This has led to multi-decade highs in household savings among the upper socioeconomic tiers.
That excess capital is flowing into asset markets, real estate, and luxury goods, creating a boom, especially in the demand for luxury goods that is likely still in its very early innings, driving potential investor gains in related stocks, including Restoration Hardware Holdings Inc (NYSE:RH), LVMH Moet Hennessy Louis Vuitton SE (OTCMKTS:LVMHF), Signet Jewelers Ltd (NYSE:SIG), Maison Luxe Inc (OTCMKTS:MASN), Capri Holdings (NYSE:CPRI), Movado Group, Inc (NYSE:MOV) and Tapestry Inc (NYSE:TPR).
With that in mind, we take a look at some of the most interesting opportunities in this group.
Tapestry Inc (NYSE:TPR) operates through three segments: Coach, Kate Spade, and Stuart Weitzman. All of these segments sit at the heart of the luxury goods space.
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.
Tapestry Inc (NYSE:TPR) recently reported results for the fiscal third quarter ended March 27, 2021, including sequential improvement in year-over-year revenue trends compared to both FY20 and FY19, and continued momentum in Digital, driving triple-digit growth versus prior year, while improving revenue trends in-stores on both a one and two-year basis
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc., said, “Our third quarter results significantly outpaced expectations, underscoring the power of the Acceleration Program and enthusiasm for our brands. Through a sharpened focus on the consumer, we fueled new customer acquisition at Coach, Kate Spade, and Stuart Weitzman and delivered robust sales growth led by Digital and China. Importantly, for the third consecutive quarter, we achieved operating income gains – compared to both FY20 and FY19 – supported by a continued reduction in promotional activity, higher AUR, and disciplined expense management. This performance is a testament to our talented teams around the world, whose creativity, agility, and resilience have enabled us to successfully navigate a challenging backdrop and deliver for our customers, while positioning Tapestry to emerge from the pandemic stronger.”
The stock has suffered a bit of late, with shares of TPR taking a hit in recent action, down about -3% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -12%.
Tapestry Inc (NYSE:TPR) managed to rope in revenues totaling $1.3B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 18.7%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.7B against $1.3B).
Maison Luxe Inc (OTCMKTS:MASN) is an interesting and rapidly growing player in the space. The company offers luxury retail consumer items that are responsibly sourced and affordable. The Company operates as a niche high-end luxury goods retailer, helping interested consumers obtain rare luxury items that may otherwise not be reliably available due to the nature of the luxury retail marketplace.
The Company focuses its efforts primarily within the fine time piece and jewelry segments, both on a wholesale and B2C (business-to-consumer) basis. The Company now also owns its Amani Jewelers subsidiary, which operates in the jewelry marketplace, with a strategic focus on the rapidly growing lab-grown diamonds market.
Maison Luxe Inc (OTCMKTS:MASN) also holds a significant investment position in Aether Diamonds, which was founded in 2020 as the world’s first and only captured carbon lab-grown diamond producer. This is a very interesting story here as well. Aether is seeing rapid growth and has a unique approach to the diamond production space.
The company also just announced this morning that it is in the process of engaging a Web Development specialist with deep experience in the high-end luxury goods space to fully overhaul the Company’s online presence, including its central website, its social media presence, and all related newsletters and web-driven content and relationships.
“The end goal here is launch a fully functioning top global ecommerce hub for rare and high-end luxury watch sales while simultaneously updating and optimizing our online presence across the board,” commented Anil Idnani, CEO and Founder of Maison Luxe. “Our analysis suggests this is low-hanging fruit toward a further increase in sales growth.”
According to its release, management notes that the Company has reached out to several top developers, and has decided on a specific developer to take on this role. More details will be offered in the near future. The Developer has been directly involved in the design and execution of projects very similar to the Company’s overhaul of its online presence, including working extensively with luxury goods brands and companies and designing ecommerce platforms for the sale of high-end watches and jewelry.
Maison Luxe Inc (OTCMKTS:MASN) powered to multi-million-dollar sales last year after launching. The company’s announcements thus far in 2021 suggest that pace is being met and likely exceeded as the world reopens and the luxury goods market thrives in a sea of savings and stimulus.
Signet Jewelers Ltd (NYSE:SIG) bills itself as the world’s largest retailer of diamond jewelry, and it represents the parent company to most of the world’s top jewelers.
The company operates approximately 2,900 stores primarily under the name brands of Kay Jewelers, Zales, Jared, H.Samuel, Ernest Jones, Peoples, Piercing Pagoda, and JamesAllen.com as well as digital marketplaces under multiple websites.
Signet Jewelers Ltd (NYSE:SIG) recently announced Alliance Data Systems Corporation (NYSE:ADS) announced that its Card Services business, has signed a multi-year renewal agreement with Signet to continue providing private label credit card services. Alliance Data is a provider of market-leading payment products and digital solutions, including Bread and Comenity-branded financial services, and Signet is the world’s largest retailer of diamond jewelry.
“Alliance Data is excited to support Signet’s commitment as a leader in omnichannel retailing,” said Val Greer, chief commercial officer, Alliance Data Card Services. “Signet is a valued client, and we are proud to provide their customers the spending power they need for special purchases like engagement and bridal jewelry or a gift for themselves in a quick and seamless way, whether in person, on the go or at home.”
Even in light of this news, SIG has had a rough past week of trading action, with shares sinking something like -3% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way.
Signet Jewelers Ltd. (NYSE:SIG) pulled in sales of $2.2B in its last reported quarterly financials, representing top line growth of 1.5%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.2B against $2B, respectively).
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