Tiffany & Co’s higher-than-expected quarterly results suggested that the luxury retailer’s push in to higher-margin fashion jewellery and affordable products was helping it win back customers.
Shares of the luxury retailer, whose sales also beat estimates, rose to a 19-month high in afternoon trading on Friday.
Tiffany has been struggling to lift sales, particularly in the Americas – its biggest market – as shoppers spend lesser on accessories and shift to cheaper, chic brands.
The Jeweller removed Chief Executive Frederic Cumenal last month and days later struck a surprise deal with activist investor Jana Partners to add three directors to its board.
Tiffany sold more fashion jewellery in the fourth quarter ended Jan. 31, driven by demand for gold jewellery and items from its “Tiffany T” collection. The company has been rapidly introducing new items in this category.
“The fashion category is where we have enjoyed the most relative success, so I think that speaks at least directionally of some success in appealing to millennials,” Tiffany’s Chairman and interim Chief Executive Michael Kowalski said on a conference call.
Sales of jewellery priced under $500 were also higher in the quarter. The company plans to increase its offerings in the category and is also banking on lifting “disappointing” e-commerce sales, Kowalski added.
“We are encouraged on solid fundamental momentum and believe TIF is making good strides,” Cowen & Co analyst Oliver Chen said in a client note.
Japan, China sales up
Sales in Japan, which rose 15 per cent to $185-million in the fourth quarter, were bolstered by the brand exposure Tiffany got through a popular television show last year, Kowalski said.
A strong yen also helped boost spending by Japanese tourists in other regions.
Chinese consumers spent more locally than as tourists, Kowalski added, leading to a 9 per cent growth in Asia-Pacific sales to $284-million.
However, Tiffany’s Americas sales fell 3 per cent to $587-million in the quarter ended Jan. 31, partly hurt by traffic disruptions at its flagship store on Fifth Avenue in New York due to its proximity to Trump Tower.
Net sales rose 1.3 per cent to $1.23-billion, the second straight rise in two years.
Excluding items, the company earned $1.45 per share.
Analysts on average had expected a profit of $1.38 per share and revenue of $1.22-billion, according to Thomson Reuters I/B/E/S.Report Typo/Error