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Tiffany & Co's global net sales fell 6 per cent over the two-month holiday period
Tiffany & Co's global net sales fell 6 per cent over the two-month holiday period

Tiffany & Co sales decline under exchange pressure

The strength of the US dollar has continued to plague Tiffany & Co, with Asia-Pacific sales reflecting weak global performance over the festive season.

In November 2015, Tiffany & Co revised its earnings guidance for the year ending 31 January 2016 to be 5–10 per cent below the previous year. The downgrade came about from the impact of the strong US dollar, which took a toll on the company’s third quarter sales.

Two months later, the company has confirmed that earnings for the full year are predicted to decrease 10 per cent compared to the previous year’s US$4.20 (AU$6) per diluted share.

Tiffany & Co updated its financial outlook after recording a 6 per cent drop in worldwide net sales to US$961 million (AU$1.4 billion) for the two-month ‘holiday period’ ended 31 December 2015. The strong US dollar was again cited as a reason for the decline, paired with “weak tourist spending in a number of markets”.

On a constant-exchange-rate basis, worldwide net sales and same-store sales fell 3 per cent and 5 per cent, respectively.

Frederic Cumenal, Tiffany & Co CEO
Frederic Cumenal, Tiffany & Co CEO

“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,” Tiffany & Co CEO Frederic Cumenal explained.

Widespread falls

It appears the challenges were felt across a number of regions, including Asia-Pacific, which reported an 11 per cent decrease in total sales to US$187 million (AU$267.6 m), while same-store sales fell 14 per cent.

The Americas and Europe also experienced revenue declines of 7 per cent to US$505 million (AU$722.7 m) and 4 per cent to US$128 million (AU$183.1 m), respectively. In both regions, same-store sales were down 10 per cent.

Japan was the only region that recorded an increase over the two-month period, which was said to reflect “higher sales to local customers and foreign tourists”. Total sales rose 9 per cent to US$123 million (AU$176 m) and same-store sales lifted 6 per cent.

Combined sales across all other operating regions decreased 20 per cent to US$19 million (AU$27.2 m), with same-store sales falling 18 per cent.

Despite widespread sales declines, Cumenal said, “…we were pleased with initial sales of our new fashion and fine jewellery designs, a solid increase in worldwide e-commerce sales and our ability to maintain gross margin at normal levels.”

He added, however, that the pressure from the strong US dollar was expected to continue in 2016.

Tiffany & Co’s fourth quarter and full year results are scheduled for release on 18 March 2015.

As at 31 December, Tiffany & Co operated 307 stores, including 81 in the Asia-Pacific region.

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