Luxury Is Back in Style

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Aug. 27 (Bloomberg) –- Holland & Co. Founder and Chairman Michael Holland and Bloomberg’s Julie Hyman discuss Tiffany’s 2Q profits topping estimates and the landscape for luxury consumers. They speak with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Earnings that topped wall street estimates.

The breakdown, and a conversation about the luxury consumer in general.

If you look at these earnings, is this a story about the broader business or about americans actually stepping up and spending money on luxury items?

This is about lower costs for tiffany.

That is what the earnings was all about.

Gross margins going up to about 53%. that is because precious metals, particularly silver have been pulling back.

Also, it has been raising prices in japan.

The following yen -- falling yen is taking a bite out and they have been raising prices.

Japanese consumers have still been buying product.

In the u.s., sales were unchanged on a comparable basis.

Sales were up about five percent, but really it has to do with some of those prices coming down.

That is a good point.

Tiffany gets less than 50% of its business here in the u.s.. is very international.

You also have to keep in mind that tiffany is known for its in diamonds and engagement rings, it has a range of products that try to appeal to a range of different -- very high margin products.

You think about the keychains, the accessory products.

Those held up really well.

I was going to say, some of the few hundred dollar keychains.

That stuff hasn't been selling as well, is what the issue is.

It is the higher end stuff that has been holding up at her in this environment -- better in this environment.

If you look around the landscape , they are looking pretty good.

One of the measures you can look at, premium flight booking.

Business and first-class bookings, not necessarily overall revenue but number of transactions have been going up every month.

Something else, the stock market.

You tend to have higher net worth individuals more invested in the market.

As mike was pointing out earlier, the stock market is up 14% for the year.

Obviously, that is a situation where they are worth more.

They are feeling better.

Speaking of feeling better, sentiment among folks who make $100,000 or more is higher and rising.

That is all good news.

To julie's point, since 2008, the market is up 150%. people at the higher end own stocks.

It actually works.

You feel better when you're stocks are up so you are more likely -- does that feed upon itself?

Trickle-down effect, you mean?

As far as the market goes, if people are out spending more.

That is exactly the game pan that ben bernanke wanted five years ago.

We have only had a little bit of it.

Housing prices are doing a little better.

It hasn't done as much as he wanted.

He can blame it as richard and the other fed heads do on washington.

The fact is, it has helped a little but not much.

Housing up another 12%. that is very real.

They have done what they set out to do and it has had some effect.

There is no question that

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