Tiffany & Co. (TIF, Financial) released its first-quarter 2020 results before the opening bell on June 9. The luxury jeweler posted earnings and revenue that fell short of analysts’ projections as sales were down in all the regions.
By the numbers
The New York-based company posted a loss of 53 cents per share in the first quarter, down from earnings per share of $1.03 in the prior-year quarter. Analysts had anticipated EPS of 3 cents. Net sales of $555.5 million dropped 45% from the year-ago period and was lower than the $701 million analysts were expecting.
Reflecting on the company’s performance, Tiffany’s CEO Alessandro Bogliolo said:
“While the first quarter was very challenging with sales and earnings significantly impacted by COVID-19, the impact of which we expect to negatively affect our full-year sales and earnings relative to 2019, I am confident Tiffany’s best days remain in front of us because there is evidence that the strategic decisions we took to focus on our Mainland China domestic business, global e-commerce, and new product innovation are paying off - even against the backdrop of a global pandemic.”
Worldwide comparable store sales for the quarter ended April 30 plunged 44%. By contrast, global e-commerce sales soared 23%. The growth was driven primarily by strong sales in the U.S. (up 14%) and the United Kingdom (up 15%).
Tiffany shut down two company-operated stores during the quarter and repositioned two other stores. It currently operates a total of 324 locations.
Segment performance
In North America, sales were down 45% in the first quarter to $225 million, while comps declined 45%. The company attributed the decline to store closures that began in mid-March in an effort to contain the spread of the Covid-19 virus.
In the Asia-Pacific region, sales tumbled 46% to $174 million. Comps declined 45% on a year-over-year basis. At quarter-end, roughly 85% of the stores in the region were fully or partly operational.
Total net sales in Japan declined 40% to $86 million, while comps dropped 41%. At the end of the quarter, about 5% of the retail stores in the segment were either fully or partially running.
Sales in Europe plummeted 40% on a year-over-year basis to $61 million. Comps fell 42%.
Impending merger
In November 2019, French luxury group LVMH Moet Hennessy Louis Vuitton (MIL:LVMH) announced it would acquire Tiffany in a deal valued at $16.2 billion, or $135 per share.
As a result of the pandemic and resulting recession, LVHM’s CEO Bernard Arnault is allegedly looking for an opening to re-negotiate the deal. Tiffany said that it is complying with its debt covenants.
Disclosure: I do not hold any positions in the stocks mentioned.
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