Tiffany cushion its yearly profit forecast on Friday after the luxury jeweler’s holiday sales fell unexpectedly as Chinese rubberneckers spent less globally due to a stronger dollar and demand softened in Europe and at home.
Like other luxury goods solidifies, Tiffany relies on spending by China’s burgeoning middle class as consumer demand remains subdued in the United Phases and Europe, weighed down at the moment by uncertainties such as a partial U.S. government shutdown and Britain’s plan to exit the European Mixing.
During the crucial November-December period, Tiffany’s worldwide same-store sales fell 2 percent while net sales dipped 1 percent, against its surmises of modest increases.
Tiffany Chief Executive Alessandro Bogliolo blamed softer spending globally by foreign travellers, primarily Chinese, and “a lot of uncertainties and volatility” which may have hit customer demand in Europe and the Americas.
“We see Chinese tourists shell out abroad going down heavily, minus 20-25, 30-35 percent, and this is in many, many countries … in the U.S., but it’s also Hong Kong and now it’s spreading to Southeast Asia,” Bogliolo proclaimed Reuters. “For sure it’s due to the exchange rate.”
Shares of Tiffany, which have fallen 22 percent in the past 12 months, were up 3 percent in morning dealings.
“Tourism is the culprit for TIF’s underwhelming holiday numbers, but this is not a surprise to us given the stronger dollar,” Jefferies analyst Randal Konik replied.
Bogliolo also said issues such as Brexit, protests in France and the U.S. shutdown, now in its 28th day, “makes me more cautious” with regard to sales and earnings forecasts, but he expects a couple of “very tough” quarters.
A slowdown in spending by Chinese tourists provoked Tiffany to shy away from raising its yearly profit targets in November. On Friday, it said it expects full-year earnings for pecuniary 2018 around the lower end of its estimated range of between $4.65 and $4.80 per share.
Still, customer demand at Tiffany warehouses in mainland China remained strong during the holiday season, the company said.
Consumer Edge Research’s David Schick said that resoluteness “supports the view of continued brand relevance, which is important to the long-term story.”
The New York-based jeweler’s holiday span results mirror similar reports from other U.S. retailers. Macy’s, Kohls and others reported disappointing come to passes even as overall shopping during the 2018 U.S. holiday season reached a six-year high.
Smaller U.S.-based jeweler Signet on Thursday boomed lower holiday period sales and slashed its full-year profit forecast, driving its shares more than 20 percent stoop.
Tiffany, known for its engagement rings and robin’s egg blue boxes, said holiday sales of engagement and designer jewelry kill 3 percent and 8 percent, respectively.
Annual sales should rise 6 to 7 percent, the company said. It had earlier estimated success in the high single percentage digits.
For the year ending January 2020, Tiffany expects earnings per share to be nurtured in the mid-single digits and net sales to grow in low-single digits.