Tiffany & Co. (TIF), Burberry Group plc (BRBY), LVMH Moet Hennessy Louis Vuitton SA(ADR) (LVMUY): Forecasting the Luxury Goods Industry

Tiffany & Co. (NYSE:TIF) is one of the most attractive longer-term opportunities in the luxury space. In the recent quarters, Tiffany & Co. (NYSE:TIF) has suffered meaningful headwinds from rising commodity costs but its outlook is improving. Recent signs of improving jewelry demand along with easing commodity costs will help Tiffany & Co. (NYSE:TIF)’s earnings come back to high growth.

Last quarter’s same-store-sales are evidence of the coming improvement. The company was able to show investors 8% year-over-year growth (versus a consensus figure for a 1.6% gain). Same-store-sales came especially high in Japan (21% year-over-year) and Asia-Pacific (9% year-over-year). Meanwhile, the Europe and Americas regions (12% and 49% of total revenues) showed same-store-sales increases of 6% year-over-year and 3% year-over-year, respectively.

For the next quarter, I expect the company to show 9% year-over-year same-store-sales growth and overall top-line growth of 8%. Meanwhile, in the long term, I would expect the company to grow overall sales by 9.5% year-over-year (5% from new store openings and 4.5% from same-store-sales growth). All this should happen as operating margins grow to over 20% from the current 18.5%, as the company shifts its sales to higher margin regions and as commodity costs pressures recede.

Trading at 2013 22.6 times P/E and paying a 1.85% cash dividend yield, I think Tiffany & Co. (NYSE:TIF) is one of the greatest assets within the luxury goods space.

The three companies named above all operate within a sector that is growing organically at a 9% year-over-year rate. With US consumers recovering from the crisis and the Asian markets still growing, I think you should follow all these companies closely, expecting growth and margin expansion.