Dollar strength and weak tourism are still putting pressure on New York jeweller Tiffany & Co.
Profit inched up however to $105.7m, sending its stock higher. Shares were up by six per cent in New York following the results announcement.
A run of falling sales has sparked a change in strategy at Tiffany, which is now focusing its efforts on growing its domestic sales and reputation.
A cost cutting programme is in full swing with selling, general and administrative costs dropping by 4.3 per cent to $402.2m over the quarter, while gross margin increased to 61.9 per cent, from 59.9 per cent.
Net earnings dropped 8.1 per cent to $193m (£146m) in the second quarter, while net earnings per diluted share slipped 5.6 per cent to $1.53.
Global net sales fell six per cent year on year during the three months to July to $932m, narrowly missing analyst forecasts of $933.9m. Sales at stores open for more than a year fell eight per cent in the latest quarter, the seventh straight quarter of declines.
Analysts polled by Consensus Metrix had been expecting a decline of 6.9 per cent.
Tiffany – which has becoming something of a cultural icon in New York – is expected to get a boost to profitability from the recent drop in precious metals prices.
Chief executive Frederic Cumenal said the slow down in sales from China was especially problematic:
The global environment continues to reflect well known challenges that we believe have had broad effects on spending by local customers, as well as foreign tourists, especially from China.
We are managing expenses efficiently, but also maintaining our marketing spending as a percentage of sales and continuing to invest in key strategic initiatives and opportunities to further strengthen Tiffany’s competitive position among global luxury brands.
The UK was a diamond in the rough for sales figures, with declines in continental Europe due to weak demand by foreign tourists and local customers.
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