Tiffany & Co. reported a dip in worldwide sales in the first quarter, weighed down by weak tourist spending.
Net sales in the first quarter, which included both Valentine’s and Mother’s Day, totaled $1 billion, compared with $1.03 billion in the previous first quarter, a 3 percent drop.
Worldwide same-stores sales fell declined by 2 percent.
“Our first quarter results reflect significant foreign-exchange headwinds and dramatically lower worldwide spending attributed to foreign tourists,” CEO Alessandro Bogliolo said in the news release on the results.
Trade tensions between the United States and China also have taken a toll on the retailer, as tariffs haven risen to 25 percent on jewelry sent to China from the U.S., as noted in the filing.
Gross profit fell about 5 percent to $619.2 million, or about 62 percent of sales, compared with $650.9 million, or 63 percent of sales, a year ago.
“The sharp decline we saw [in foreign tourist spending] really presented itself for the first time in June of last year and we have been running down significantly since that point in time,” Chief Financial Officer Mark J. Erceg said during the company’s earnings call Tuesday morning.
Net sales in the Americas, where the most Tiffany stores are located, were down 4 percent to $406 million. Same-store sales in the region fell 5 percent.
European sales fell 4 percent to $102 million while same-store sales were down 7 percent.
Asia-Pacific sales dropped 1 percent to $324 million as tourist spending slowed, and same-store sales were down by 5 percent.
Sales in Japan fell 4 percent to $145 million, again linked to lower tourist spending, while same-store sales were down 4 percent.
Sales from the “other” segment, which includes five Tiffany stores in the United Arab Emirates, were a bright spot on the balance sheet, climbing 17 percent to $26 million as wholesale diamond sales grew.
However, same-store sales in the UAE fell by 17 percent.
By category, sales of pieces from Tiffany’s jewelry collections, which includes lines like “Tiffany T” and “Paper Flowers,” increased 1 percent.
Sales of engagement jewelry fell 6 percent while jewelry from designers such as Elsa Peretti, Paloma Picasso and Tiffany & Co. Schlumberger dropped 14 percent.
As of April 30, there were 321 Tiffany stores in operation compared with 314 a year ago. There are 124 stores in the Americas, one more than a year ago.
Looking ahead, Tiffany expects worldwide net sales to increase by a low-single-digital percentage over last year.
Earnings per share are expected to continue to decline in the second quarter of the year due to the effect of lower foreign tourist spending, though CEO Bogliolo noted in a statement that sales to local customers, particularly in China, are on the rise.
“At the core of our business, global sales attributed to local customers, led by sales in China, grew over last year’s very strong sales results,” he said.
He said growth in sales to local customers “reflects progress” and said Tiffany is set to improve in the second half of the year.
News Source: nationaljeweler