Tiffany sticks to 2019 targets, helped by e-commerce; shares rebound
(Adds details from interview with CEO, updates share price)
By Aishwarya Venugopal and Melissa Fares
March 22 (Reuters) - Luxury retailer Tiffany & Co
said Friday it expected earnings growth to resume in the second
half of the year, helped by a healthy e-commerce business, a
forecast that allowed investors to look past slightly
disappointing quarterly sales.
The New York-based company also stuck to its fiscal 2019
revenue and profit targets, and its shares were up 3.6 percent
in afternoon trade. They earlier fell as much as 5 percent when
investors initially reacted to quarterly sales that narrowly
missed Wall Street estimates.
Weakening economic growth in China, especially against the
backdrop of the trade spat between Beijing and Washington, has
been a worry for luxury goods companies that rely on the
country's burgeoning middle class to boost sales. Two months
ago, Tiffany had warned of soft demand in the holiday season
because of low spending by Chinese tourists and weakness in
Europe and at home.
"We have done a lot, a lot of new things, also things where
we had made some mistakes, we are learning, and we are
addressing it," Chief Executive Alessandro Bogliolo said on a
post-earnings call, adding he would have "started a holiday
campaign three weeks earlier."
The jeweler has refreshed its collections with more
affordable items such as pendants and earrings to appeal to
millennials who gravitate to lower-priced competitors such as
Denmark's Pandora A/S and Signet Jewelers.
The retailer said its e-commerce business grew roughly twice
the rate of its overall business. Later this year, Tiffany plans
to launch an e-commerce enabled website in China to cater to the
Bogliolo told Reuters on Friday he expects the company's
percentage of total sales that are online, currently at 7
percent, to grow.
"I'm really confident that we will reach 10 percent, maybe
even 15 percent one day," he said. "But I don't see that as a
cannibalization of brick-and-mortar."
Earlier in the year, the company blamed a stronger dollar
for weak tourist spending globally during the crucial
The company also said it is taking steps to control the
volatility surrounding tourist spending by investing in its
For instance, strong marketing campaigns surrounding new and
improved product assortments and increasingly digital in-store
experiences will help earnings growth resume in the second half
of the year, the company said.
The company still expects a decline in per-share profit in
the first half of the year due to the external factors Tiffany
flagged in the quarter.
In the reported quarter, comparable-store sales dropped 1
percent as demand for engagement and designer jewelry fell.
Net sales from the Americas region, which accounts for
nearly half of the company's total sales, were flat while those
from the Asia-Pacific region fell 3 percent.
Tiffany's net sales fell to $1.32 billion, while analysts on
average were expecting sales of $1.33 billion, according to IBES
data from Refinitiv.
Net earnings rose to $204.5 million, or $1.67 per share, in
the fourth quarter ended Jan. 31, from $61.9 million, or 50
cents per share, a year earlier, when the company had higher
provisions for income taxes.
"Despite some softer top-line performance and
better-than-expected cost control, we would categorize the
release as generally clearing low expectations," William Blair
analyst Dylan Carden wrote in a note.
(Reporting by Aishwarya Venugopal in Bengaluru and Melissa
Fares in New York; Editing by Susan Thomas, Bill Trott and Nick
First Published: 2019-03-22 17:02:11
Updated 2019-03-22 18:27:58
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