The headlines figures looked pretty rough for Tiffany & Co. last week. The luxury jeweler reported a 15% fall in profits for last quarter and cut its earnings outlook for the year.
Much of this is down to a stronger dollar. An expensive currency has not only made Tiffany’s products more expensive overseas but has also eaten away at revenue brought back to US.
Weaker tourism also dealt a blow. Foreign visitors make up a quarter of the company’s US revenue, and a hefty 40% of sales at its flagship store in Manhattan. So it is unsurprising that sales fell $990.5 million for the three month through July 31, compared with $992.9 million a year earlier. Profits meanwhile fell 15% to $104.9 million from $124.1 million a year earlier.
But this is not the whole picture. While net sales fell 3% to around $2 billion, on a constant-exchange-rate basis, worldwide net sales increased 4%. The same quarterly report also shows the company has bucked the trend massively when it comes to China.
While devaluation of the yuan, a slowing economy, and a government crackdown on conspicuous spending is expected to hurt the Western luxury brands that have expanded aggressively into the country, this is not so with Tiffany’s – yet.
To the contrary, Tiffany’s sales in the country – where Tiffany’s has opened two new stores – have seen double digit growth in the quarter growth.
Ok, so a LOT has happened in China since July 31 but Tiffany’s is still staying the course with its China expansion plans. It might be too premature to say whether Tiffany’s diamonds are forever, but there is still life in the old girl yet.
Photo: Steve Jurvetson via Flickr