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Tourist Slump Damages Tiffany’s Holiday

Market volatility and lower spending by Chinese travelers affected results.
Jan 20, 2019 7:06 AM   By Rapaport News
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 Sales at Tiffany & Co. fell during the holiday season, amid reduced spending by Chinese tourists, while economic uncertainties affected demand in the Americas and Europe.

“Overall holiday sales results came in short of our expectations, which had called for modest year-over-year growth,” Tiffany CEO Alessandro Bogliolo said Friday.

Global sales slipped 1% to $1.04 billion for the November-December period, while comparable store sales — those at branches open for at least a year — fell 2%. However, on a constant-exchange-rate basis, which accounts for sales prior to foreign-currency conversion, both overall and comparable sales were equal to last year’s, Tiffany said.

Total sales in the Americas slid 1% to $514 million, due to a drop in spending by both local customers and foreign tourists. Proceeds in the Asia-Pacific region fell 3% to $226 million for the holiday period, while revenue in Japan rose 4% to $150 million. Although mainland China saw double-digit-percentage growth from local customers, there was a slowdown in spending by Chinese tourists overseas. European sales dropped 4% year on year to $132 million.

By category, sales of engagement jewelry decreased 3%, while Tiffany’s “designer jewelry” category dropped 8%. Sales of jewelry collections increased 2% over the holiday period.

Based on the holiday results, the jeweler has decreased its full-year forecast of sales growth for fiscal year 2018, which ends January 31. It now expects worldwide net sales for the year to increase by 6% to 7% compared with the high-single-digit percentage it had previously reported. The company will report full results for the year in March.

The current “external pressures” are expected to have some negative effect on fiscal 2019 results, Bogliolo noted, primarily in the first half of the year. However, the company is on a “solid path for improved sales,” he added.

Tiffany will launch new products, revamp its marketing, expand stores, and enhance its website offerings during the year, the CEO pledged.

Global net sales for the fiscal year that begins February 1 are expected to increase by a low-single-digit percentage versus 2018, with comparable sales rising by a mid-single-digit percentage, the company said.

The results follow disappointing holiday figures from Signet Jewelers, with the retailer’s total sales falling 2.5% to $1.84 billion during the period.

Image: A Tiffany store in Shenzhen, China. (Coreamyilsa Lim)
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Tags: Alessandro Bogliolo, Rapaport News, Tiffany, Tiffany & CO.
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