Jeweler Tiffany posts steepest sales drop since financial crisis
today May 25, 2016
Tiffany & Co reported its steepest drop in quarterly sales since the peak of the global financial crisis, as a strong dollar discouraged tourists from buying its high-end jewelry and eroded revenue from markets outside the United States.
Shares of the company, whose "Blue Book" collection pieces were worn by actress Cate Blanchett on the Oscar red carpet this year, fell 4.5 percent in premarket trading on Wednesday.
In the Americas region, Tiffany's sales at stores open more than a year plunged 10 percent in the first quarter. Analysts on average had expected a 9.1 percent decline, according to research firm Consensus Metrix.
"Decline in customer share is evident among most shopper segments, including more affluent households," said Neil Saunders, the chief executive of research firm Conlumino.
"It is especially pronounced among affluent younger shoppers where the brand is seen as representing 'old world luxury'."
The Americas region accounted for nearly half of the jeweler's total sales last year.
Chief Executive Frederic Cumenal said the company also faced pressure from lower foreign tourist spending in Europe and Asia, particularly in Hong Kong.
Slowing economic growth in China has hurt tourist traffic from mainland China to Hong Kong.
Tiffany's same-store sales in the Asia Pacific region, its second biggest market, slumped 15 percent.
Japan was the only bright spot for Tiffany in the quarter, with same-store sales rising 12 percent.
Tiffany forecast a mid-single digit percentage fall in its full-year profit. The company had earlier said it expected earnings to stay flat or fall by up to mid-single digit in percentage terms.
Net income fell 16.6 percent to $87.5 million, or 69 cents per share, in the quarter ended April 30. Tiffany said it expected current-quarter profit to "decline by a similar rate".
Net sales dropped 7.4 percent to $891.3 million - the biggest fall since mid-2009 - missing the average analyst estimate of $915.1 million, according to Thomson Reuters I/B/E/S.
Tiffany's shares were trading at $61 before the bell.
Up to Tuesday's close, the stock had lost more than a quarter of its value in the past 12 months.
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