Shares of iconic jewelry store operator Tiffany & Co. (NYSE: TIF) are not having a very glamorous Wednesday today. Share prices fell as much as 5.6% before recovering to a 5.2% drop as of 2:40 p.m. EDT. Investors are worried about the company's plans to renovate its flagship store on 5th Avenue on Manhattan.
The 10-story building, opened in 1940, is due for a drastic makeover. Tiffany aims to complete the renovations in the fourth quarter of 2021, increasing the company's capital expenses by as much as 2% a year over the next three years. Those expenses should add up to nearly $15 million.
Tiffany CEO Alessandro Bogliolo is looking forward to creating "a dramatic new experience for customers." The store will spill its retailing operations over into an adjacent building while those "pardon our dust" signs are up.
This company is not known for splurging on capital-heavy projects, so it's understandable that some investors are getting nervous here. At the same time, a $5 million annual increase to a relatively modest capital expense budget is peanuts next to Tiffany's glittering profits , which worked out to $677 million of free cash flows and $1.1 billion in EBITDA profits over the last four quarters.
The market's reaction today simply looks harsh, but Tiffany's investors have still enjoyed a market-beating 45% return over the last 52 weeks. Soaring charts are often vulnerable to sudden corrections like this one, and it doesn't take a whole lot of bad news to cause that.
10 stocks we like better than Tiffany & Co.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Tiffany & Co. wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 6, 2018