Tiffany Posts Falling Revenues as Sales Fall in All Regions

Jewelry
26/08/2016 09:46

Tiffany & Co. reported that revenue for the second quarter was $932 million versus the consensus estimate of $934.74 million, as it recorded falling sales on the year in the quarter and first half of this year compared to the year-earlier periods. In the Americas, total sales of $434 million in the second quarter and $837 million in the first half were both 9% below last year, with declines of 9% and 10%, respectively, in comparable store sales. On a constant-exchange-rate basis, total sales and comparable store sales declined 8% and 9%, respectively, in both the second quarter and first half. Management attributed the declines to lower spending by U.S. customers as well as by Chinese and other foreign tourists.

In the Asia-Pacific region, total sales of $230 million in the second quarter and $469 million in the first half were 6% and 7%, respectively, lower than the prior year, and comparable store sales declined 12% and 13%, respectively. On a constant-exchange-rate basis, total sales and comparable store sales declined 3% and 9%, respectively, in the second quarter and 4% and 11%, respectively, in the first half. Sales growth in China and Korea was offset by a continuation of significant declines in Hong Kong and more moderate declines in most other markets.
In Japan, total sales increased 10% to $138 million in the second quarter and rose 9% to $269 million in the first half due to comparable store sales growth of 13% and 12%, respectively. However, on a constant-exchange-rate basis, total sales and comparable store sales declined 5% and 3%, respectively, in the second quarter and declined 2% and rose 1%, respectively, in the first half. Management noted lower spending by Chinese tourists in both periods.

In Europe, total sales declined 12% to $111 million in the second quarter and 11% to $208 million in the first half, due to respective declines of 17% and 16% in comparable store sales. On a constant-exchange-rate basis, total sales and comparable store sales declined 8% and 13%, respectively, in the second quarter and 7% and 13%, respectively, in the first half. Lower sales in continental Europe were attributed by management to weak demand by foreign tourists and local customers, in contrast to better performance in the United Kingdom.

Other sales declined 3% to $18 million in the second quarter and 20% to $40 million in the first half, reflecting comparable store sales declines of 22% and 21%, respectively. Management noted lower retail sales in the United Arab Emirates (UAE) and an increase in wholesale sales of diamonds. Tiffany opened four company-operated stores in the second quarter and closed one existing location. As of July 31, the company operated 311 stores (125 in the Americas, 83 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in the UAE), compared with 304 stores a year ago (124 in the Americas, 79 in Asia-Pacific, 56 in Japan, 40 in Europe, and five in the UAE).