Tiffany Sales Stall as Tourist Spending Dries Up

RAPAPORT… Sales at Tiffany & Co. were flat at $1.01 billion in the
third fiscal quarter as increases in mainland China compensated for weak
spending in the US and Hong Kong.



Revenue declined 4% to $422.5 million in the Americas region as
sales to tourists fell, while local customers also trimmed their spending, the
jeweler said Thursday. Asia-Pacific sales were unchanged at $294.1 million amid
“double-digit” growth in mainland China and the negative effect of protests in
Hong Kong. Sales rose in Japan, but fell in Europe.


“Our underlying business remains healthy, with sales
attributed to local customers on a global basis growing in the third quarter,”
Tiffany CEO Alessandro Bogliolo said in a statement Thursday.


The depreciation of the Chinese yuan currency also lowered
the sales total for the Asia-Pacific region in dollar terms. Excluding the
impact of exchange-rate fluctuation, global same-store sales rose 1%, but still
missed analysts’ estimate of a 1.4% increase, according to Reuters. Net profit
slid 17% to $78.4 million due to increased costs and a higher rate of income
tax.


The results for the three months ending October 31 came a
week and a half after European luxury group LVMH agreed to acquire the New
York-based retailer for $16.2 billion. The takeover will give Tiffany “support,
resources and momentum” to help it grow, Bogliolo said following the deal.


“We are very excited about the recently announced
transaction with LVMH and, pending the required approvals, look forward to
becoming part of the LVMH family of exceptional luxury brands,” the executive
added Thursday.


Tiffany’s sales of jewelry collections were flat at $541.8
million, while revenue from engagement jewelry was also stable at $276.8
million. Designer-jewelry sales rose 1% to $112 million.


During the first nine months of the fiscal year, total sales
fell 2% to $3.07 billion, while net profit dropped 11% to $339.9 million.


Image: A Tiffany store in Hong Kong. (Shutterstock)