Q1 GDP Growth Revised Lower

The government pared back its estimate of first-quarter GDP growth. The original report said the economy grew by 3.2% for the firth three months of the year but now the Feds say it was 3.0%. That’s not a big change but it highlights the issue that the economy isn’t growing nearly fast enough to pull us from the recession.
Compare the last bar on this chart to the long stretch of GDP growth in the late 1990s.

As an investor, this caught my eye:

The latest report showed consumers increased their spending by 3.5%. That was below the previously estimated 3.6% gain but more than double the 1.6% increase of the fourth quarter.

That’s a good sign. Sure enough, this comes out today: Tiffany raises outlook as profit, sales soar. As always, company guidance is key. If you’re a publicly traded company, you don’t want to shout out good news unless you can back it up. If Tiffany (TIF) is doing well, that means the high-end market is recovering.

Excluding one time items, Tiffany earned 48 cents per share, beating Wall Street forecast of 37 cents, according to Thomson Reuters I/B/E/S.
Sales at its stores open at least a year, or same-store sales rose 10 percent, lifted by growing international sales.
In Asia, sales rose 50 percent, while at its flagship store on Manhattan’s Fifth Avenue, sales were up 26 percent.
Overall sales rose 22 percent to $633.6 million during the quarter.
Tiffany raised its full year profit forecast to a range of $2.55 to $2.60 per share, above the average Wall Street estimate of $2.51. Tiffany expects sales to be up 11 percent this year and to open 16 stores.

So they beat estimates by nearly 30% and raised their full-year. I’m not suggesting TIF is a buy, the stock is a bit pricey, but it gives us a clue where business is strong.
The advantage of looking at Tiffany is that its fiscal cycle is slightly off most other companies. Their fiscal calendar ends at the end of January instead of the beginning. This makes sense because they want any lingering Christmas sales in the same reporting period. As a result, today’s report covers February, March and April — whereas the last earnings season for most stocks was for January, February and March. This off-cycle report could mean that consumers are in a better mood than Wall Street thinks.

Posted by Eddy Elfenbein on May 27th, 2010 at 10:45 am

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