Tiffany & Co.'s Sales Slump as Sparkle Fades Among Foreign Tourists

Jeweler lowers guidance, but increases dividend

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Jun 04, 2019
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Tiffany & Co. (

TIF, Financial), the iconic jeweler favored by actress Audrey Hepburn in the classic film “Breakfast at Tiffany’s,” reported first-quarter results before the opening bell on Tuesday.

The New York-based luxury jeweler and specialty retailer posted earnings of $1.03 per share, topping Refinitiv’s estimates of $1.02. Net income, though, declined 12% from a year ago to $125.2 million.

Revenue fell 3% from the prior-year quarter to $1 billion, just shy of expectations of $1.02 billion.

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In a statement, CEO Alessandro Bogliolo said the “results reflect significant foreign exchange headwinds and dramatically lower worldwide spending attributed to foreign tourists.”

Same-store sales decreased 2%, which was more than the 1.6% decline analysts were anticipating. Including the impact of foreign exchange rates, same-store sales declined 5%. This also marked the company’s first decline in comparable sales in two years as it saw lower spending by tourists worldwide. For example, in the Americas, the jeweler recorded an approximately 25% decline in tourist-related sales compared to a year ago, with sharper declines among Chinese visitors.

As a result of the ongoing trade war between the U.S. and China, as well as a stronger dollar, Tiffany lowered its earnings guidance for the year. It now expects low-to-mid-single-digit earnings per share growth, compared to mid-single-digit growth previously.

For the second quarter, it is forecasting a decline in net earnings per share, reflecting continuing sales pressure from lower foreign tourist spending.

Despite the disappointing outlook, Bogliolo said he is encouraged that “global sales attributed to local customers, led by sales in China, grew over last year’s very strong sales results.”

“We believe this growth in sales to local customers reflects progress in executing our strategic priorities, including innovations across products, communications and the customer experience, and that Tiffany is positioned for improving trends in the second half of 2019,” he added.

In addition, despite the 25% tariff implemented on jewelry exported from the U.S. to China, Tiffany said it will hold off on significant increases in retail prices for now.

While the disappointing sales results and lowered profit guidance sent shares down 3% in premarket trading, the stock rebounded on a dividend increase.

The board of directors announced it is increasing Tiffany’s quarterly dividend by 5% to 58 cents per share. The next distribution will be paid on July 10 to shareholders of record as of June 20.

With a market cap of $10.95 billion, Tiffany’s shares were up 3.14% at $93 on Tuesday morning. GuruFocus estimates the stock has gained 17% year to date.

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Disclosure: No positions.

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