Currently viewing Global edition

Lower holiday sales weigh on Tiffany profit outlook

New York-based luxury jeweller Tiffany & Co says it expects fiscal 2018 profit to come in at the low-end of its guidance range as sales over the important December holiday period disappointed.
Lower holiday sales weigh on Tiffany profit outlook Lower holiday sales weigh on Tiffany profit outlook Lower holiday sales weigh on Tiffany profit outlook Lower holiday sales weigh on Tiffany profit outlook Lower holiday sales weigh on Tiffany profit outlook

Tiffany & Co has reported disappointing holiday sales

The retailer cited lower spending by Chinese tourists to the US, on account of the stronger greenback and softer demand in Europe and at home, for the disappointing sales.

The company now expects full-year earnings to come in between US$4.65-$4.80 per share, below the $4.77 a share forecast by 28 Wall Street analysts for the financial year ending January 31.

"Overall holiday sales results came in short of our expectations, which had called for modest year-over-year growth," CEO Alessandro Bogliolo said. The 2017 holiday period saw sales growth of 8%.

Tiffany also tempered its sales outlook for the year, saying net sales were expected to rise between 6-7%, down from the previously suggested high-single-digit growth rate.

For the two-month holiday period ended December 31, sales dropped 1% to $1.04 billion and comparable sales fell 2%. However, on a constant-exchange-rate basis, both metrics remained flat, the company said.

Bogliolo noted strong sales in China and Japan and "healthy growth" in global ecommerce sales.

"We attribute the difference (in holiday sales) partly to lower sales to foreign (primarily Chinese) tourists globally, and to softening demand attributed to local customers in the Americas and Europe, which we believe may have been influenced more than expected by external events, uncertainties and market volatilities," Bogliolo said.

For 2019, Tiffany expects worldwide net sales increasing by a low-single-digit percentage over 2018 but flagged an expected decline in net earnings in the first half of the year, reflecting sales pressures from lower foreign tourist spending and the effect of a stronger US dollar, as well as higher strategic investment spending.

The company expects to report its fourth quarter and full year financial results on March 22.

Tiffany closed 5.35% or $4.56 higher in New York on Friday at $89.82, but is down 17% over the past year. The stock last peaked at $141.64 in July and the jeweller has a market capitalisation of $10.95 billion.