Tiffany & Co shares are not an investor’s best friend today, as sales slide over seven per cent in the last quarter
Diamonds may be a girl's best friend but they've fallen out of favour with tourists in the face of the strong dollar.
Sales at luxury jeweller Tiffany & Co have dropped by 7.3 per cent over the last quarter, its steepest slide over a three month period in almost six year – sending investors running.
Shares in Tiffany slumped by almost three per cent at the open in New York, adding to a 25 per cent slide over the last year.
The company also dialled back full year expectations, warning that it now foresees full year earnings per diluted share down by a mid-single digit.
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It had perviously thought earnings could stay flat.
The strong dollar holding back spending from tourists was to blame for the sales slide, according to the New York based company. And Tiffany isn't the first retailer to blame the rising dollar for sales woes.
Revenue in the quarter fell to $891.3m (£606m) missing analyst expectations of $915m. Profit was 69 cents a share, marginally beating an average projection of 68 cents per share.
Frederic Cumenal, chief executive officer, said:
As expected, this was a difficult quarter in terms of both sales and earnings growth. We faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the US and Asia, particularly in Hong Kong.
The sales declines were the same around the world, barring Japan.
In the Americas sales slid by nine per cent. They dropped 12 per cent in Asia-Pacific and in Europe, they fell 14 per cent.
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In Japan sales climbed by five per cent, though even that was well under the 10.2 per cent increase analysts had estimated.
Neil Saunders, chief executive of retail consultants Conlumino, said:
Tiffany has opened its new fiscal year with another set of numbers devoid of any sparkle. Total worldwide sales declined by seven per cent, with worldwide same-store sales down nine per cent.
Both slips come off the back of negative growth in the prior year, which means that over a two year period Tiffany’s sales are down by almost 12 per cent. Once again, declines were seen across almost all regions – with Japan the only notable exception.
Tiffany needs to reconnect with consumers and make itself relevant. As much as this can be difficult in the slow moving jewelry sector, it is vital if the group is to reverse the slide in shopper numbers and in sales.
Such a reconnection is not likely to yield an immediate uplift, so even if it starts to correct the problem now our view for the current year remains negative.