New York—Tiffany & Co today reported lackluster holiday sales, blaming the strong U.S. dollar and weaker tourist spending for its downturn. Besides lowering its forecast, the retail jeweler also plans to cut jobs.
Global net sales declined 3% on a constant exchange-rate basis, and comparable store sales fell 5% in the two months ending Dec. 31 due mostly to declines in the Americas and Asia-Pacific offsetting growth in Japan and Europe.
Tiffany’s new forecast excludes a 4 cent per share charge in the fourth quarter for “staff and occupancy reductions,” but the company did not provide further detail.
“The job cuts are definitely not as large as what we’d done at the end of 2008,” spokesperson Mark Aaron said, adding that the occupancy reduction was not related to store closures. In 2008, Tiffany offered voluntary retirement incentives to 800 employees.
According to Frederic Cumenal, ceo, “In the holiday period, we continued to feel pressure from the strong U.S. dollar on the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S., which we expect will continue into 2016. We believe overall sales results were negatively affected by restrained consumer spending tied to challenging and uncertain global economic conditions and we expect 2015 earnings to come in at the low end of our previously-set range of expectations. Nonetheless, we were pleased with initial sales of our new fashion and fine jewelry designs, a solid increase in worldwide e-commerce sales and our ability to maintain gross margin at normal levels.”
Full Year Profit to Decline
By region: the Americas posted a 5% decline in sales with comparable store sales down 8%. “Lower sales occurred across much of the U.S., exacerbated by lower foreign tourist spending in New York and certain other U.S. markets which management attributes to the strong U.S. dollar. Total sales rose in Canada and Latin America. Total sales of $505 million were 7% below the prior year.”
In the Asia-Pacific region, sales were down 6% with a 9% drop in comparable store sales on a constant-exchange-rate basis. “A continuation of strong sales growth in China was more than offset by significant weakness in Hong Kong and Singapore, with varying performance in other markets.”
Sales improved, however, in Japan, total sales rose 12% on a constant-exchange-rate basis total sales increased 12% and comparable store sales rose 10%, reflecting higher sales to local customers and foreign tourists.
In Europe, on a constant-exchange-rate basis total sales rose 4% and comparable store sales declined 2%. Sales rose in the U.K., but performance was mixed across continental Europe with a notable decline in France, all of which reflected varying levels of demand among local customers and foreign tourists.
Other sales on a constant-exchange-rate basis declined 16% in total and comparable store sales on that same basis decreased 12%.
Tiffany now expects net earnings in the year ending January 31 to decline approximately 10%, compared with its previously-reported forecast calling for a 5%10% decline from last year’s $4.20 a share. The company said it now expects total earnings to decline by 10% for the year ending Jan. 31 versus its previous forecast of a decline of 5%-10%.