Warren Buffett's Does A Little Shopping At Tiffany & Co.

by Deidre Woollard (RSS feed)
Feb 15th 2009 at 7:02PM

Famed billionaire Warren Buffett's Berkshire Hathaway Inc. picked up a pricey bauble this Valentine's week, $250 million of Tiffany & Co. debt. Tiffany & Co. is still the world's second-largest retailer of luxury jewelry but like many retailers, especially those in the jewelry business, it took a deep hit over the past holiday season. With its stock share price falling and lower sales numbers, the Buffett boost provides much-needed insulation in an unsure world.

Buffett has been buying up debt everywhere lately on companies as varied as Harley-Davidson and Sealed Air Corp., the makers of Bubble Wrap. Bonds on this debt pay between 10 and 15 percent. The Tiffany bonds are at 10 percent and half of the bonds will mature in 2017, the rest two years later. Tiffany will use the money to repay debt and regroup in a time that has seen other jewelry retailers including Whitehall and, just last week, Fortunoff, fall into bankruptcy. In the last year or so much of Tiffany's strategy has involved opening smaller stores and creating more entry-level sterling silver pieces. Last March before the economic crisis really got into full spin, I questioned whether these stores and this merchandise represented a dilution of the TIffany brand. Given the prevailing winds of change, Tiffany could decide to reverse course, open fewer stores this year and strengthen its luxury reputation or it could continue on the current track and hope that consumers with less money to spend will still want a little piece of Tiffany.

Tags: berkshire hathaway, BerkshireHathaway, tiffany, warren buffett, WarrenBuffett

Filed under: Jewelry

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Reader Comments (Page 1 of 1)

shieldsbrown Feb 15th 2009 10:00PM

Deirdre: a question for you. I live on the fringes of Orange County, CA, where the hillsides are crawling with $10million plus new homes. The people there are buying silver cutlery by the ton. Trouble is, they can't find anyone to clean it properly. The local Tiffany's has, apparently quite unwillingly, found a professional silver-cleaner to hire out to them. I found this out while getting a Tiffany Peretti bracelet re-sized. The small independent jeweler I went to (he's closer) told me the above story, and that if I'd gone straight to Tiffany, they wouldn't have been interested in the small repair I needed. My question (at long last) is this: what happened to service? If I lay out a bundle for something at a jeweler, I don't expect to be told 'sorry, honey, no repairs'. Or have I been living under a rock for too long?

Deidre Woollard Feb 15th 2009 10:45PM

Hello shieldsbrown--That's an interesting question. I am hoping that small repairs and special services will be one way that independent jewelers will stay afloat. Tiffany's website does say that they will offer cleaning, repairs and silver polishing but like any big brand it probably varies from store to store.

Kate Feb 18th 2009 12:24AM

@ Posters above: your information is bad.

Of course Tiffany does repairs and cleaning of both their fine jewelry and silver (free) and their silver junk jewelry (for a charge). This is true in Chicago, NYC, and even Austin, Texas. I can't imagine it's any different in OC.

The irritating thing about Tiffany now is is not that minor repairs are beneath them but that apparently nothing is. Take in a $175,000 ring to be resized at the Chicago store, and you will have to sit and wait behind hordes of Croc-wearing tourists fretting about whether it's worth the extra $30 or whatever to get their tacky tags engraved at Tiffany rather than the Things Remembered cart in their local mall. The in-store experience is appalling, particularly since their remodel. You now actually have to walk through the silver junk to even get to the customer service desks.

But, to Tiffany's credit, when I have mentioned my unwillingness to go in they have actually driven the several miles to my office to meet with me and discuss resizings. And my spending at Tiffany has not been particularly notable.