Tiffany & Co. (TIF), Michael Kors Holdings Ltd (KORS): Two Specialty Retailers Worth Exploring

With strong growth in a struggling retail industry, two high specialty retailers might be worth your due diligence. But which is the best — Tiffany or Michael Kors?

This high-end jewelry company thrives

Tiffany & Co. (NYSE:TIF) created new 52-week highs on Tuesday after the company announced earnings. The stock was the largest gainer on the S&P 500 with a 5% intraday pop.

Tiffany & Co. is a jeweler and specialty retailer whose principal merchandise offering is jewelry. With Tiffany & Co. (NYSE:TIF) having a global presence, investors were anxiously awaiting their quarterly report in an attempt to assess both high-end retail and the jewelry business as a whole.

While the company met revenue expectations for the quarter, the company’s earnings per share (EPS) of $0.70 beat expectations by $0.18. A large reason for this beat was the company’s Asia-Pacific growth of 15% year-over-year.

In the Asia-Pacific region, currencies have helped boost earnings in 2013. In particular, the Yen has remained strong. Translating Yen earnings to U.S. Dollars creates an earnings boost for the company.

Tiffany & Co.As we look ahead, Tiffany & Co. (NYSE:TIF) is seeing solid gains in global comparable store sales of 8% year-over-year. The company is following the most recent trend of fundamental gains seen by other luxury high-end retailers such as Saks and the Swiss firm Richemont. With that said, the company looks to be performing strongly in all of its segments – which makes it very appealing.

Another high-end rapid growth option

Michael Kors Holdings Ltd (NYSE:KORS) just announced earnings today. The company reported Earning Per Share of $0.50 compared to $0.22 in the same period the previous year. In 2013, the company has seen its valuation increase 21%. Since its initial public offering (IPO) in December 2011, the stock has gained 155%; thus, producing a nearly continuous uptrend.

Michael Kors Holdings Ltd (NYSE:KORS) is a designer, marketer, distributor and retailer of branded women’s apparel and accessories. The company’s products are sold in Michael Kors stores and also in retail stores such as Macy’s and Nordstrom – with its handbag and wallets being very popular among high-end shoppers.

The company is in a hyper-growth stage, with its previous quarter producing revenue growth of 70% year-over-year. During its last five quarters the company has soundly beat expectations – always a result of significantly better than expected bottom line performance.

Looking at Michael Kors Holdings Ltd (NYSE:KORS) as a company, it is still quite small with under $2 billion in annual revenue. It has almost 250 stores in the U.S., 45 stores in Europe, and does not operate its own e-commerce website. Thus, the company has a great opportunity to expand and further bolster sales growth.

Which is the better opportunity?

Michael Kors Holdings Ltd (NYSE:KORS) and Tiffany & Co. (NYSE:TIF) are completely different types of companies; either of which I believe would make a great investment. Michael Kors makes handbags while Tiffany & Co sells diamonds. Thus, one might suggest that since “a diamond is forever” that Tiffany & Co. is the better long-term investment.

As we’ve seen with Coach, Inc. (NYSE:COH) — and its near 20% one-year loss – a trend can change very quickly for high-end apparel companies. With that said, Michael Kors Holdings Ltd (NYSE:KORS) is still in its growth phase. The company is gaining momentum with explosive year-over-year growth. Yet, the company is fairly cheap — trading at 25 times next year’s earnings – compared with Tiffany & Co. (NYSE:TIF) trading at 20 times next year’s earnings with much slower growth.