Tiffany Sales Fall as Tourist Dip Worsens

RAPAPORT… Tiffany & Co.’s revenue and profit dropped in the first fiscal
quarter amid a continued decrease in spending by foreign tourists and a strong US dollar, it said Tuesday. 


Total revenue fell 3% to $1 billion in the three months
ending April 30, while comparable-store sales — at branches open for at least a
year — declined 5%. Profit slid 12% to $125.2 million.

“Our first-quarter results reflect significant foreign-exchange headwinds and dramatically lower worldwide spending attributed to foreign tourists,” said Tiffany CEO Alessandro Bogliolo. However, Tiffany noted an increase in purchasing by local customers during the period. 

The
devaluation of the Chinese yuan against the dollar amid a tariff dispute with the US has weighed on the jewelry retailer’s results. The company earns money
in foreign currency from its global stores, which it then converts into US
dollars for reporting purposes.

Revenue for the Americas slipped 4% to $406 million for the
period. Tourist sales in the region fell about 25%, with spending by Chinese visitors declining by an even greater amount. The slowdown in that segment worsened compared with the second half of 2018, executives said on an investor call Tuesday.

Sales in Asia Pacific inched down 1% to $324 million, as strong
growth in mainland China was outweighed by mixed results in other markets in the
region. Proceeds in Japan fell 4% to $145 million, and those in Europe dropped
by the same percentage to $102 million.


Tiffany lowered its full-year profit forecast for fiscal
2019, factoring in a potential 25% tariff on jewelry the company exports from the US to China. It now expects net earnings to increase by a low-to-mid-single-digit
percentage compared with the mid-single-digit percentage it previously predicted. The company maintained its outlook for sales growth in the
low-single-digit range for the year.


Image: Tiffany’s New York flagship store. (Tiffany & Co.)