Michael Kowalski, chairman and chief executive officer of Tiffany & Co., sparked a mini luxe sell-off Tuesday when he voiced concerns about weakness in Europe and on the East Coast in the U.S., driving the jeweler’s stock down 8.7 percent.
Kowalski admitted to “recent sales weakness in Europe and in the eastern part of the U.S.” The comment sent the company’s stock spiraling down to $67.22, even as third-quarter profits jumped 62.8 percent and handily beat Wall Street estimates.
Kowalski’s comments reverberated in the shares of other high-end retailers, helping to push Ralph Lauren Corp. down 3.2 percent to $140.66, as Coach Inc. slipped 3.1 percent to $60.20, Saks Inc. fell 3 percent to $8.64 and Nordstrom Inc. declined 1.2 percent to $44.66.
The sell-off came just as the sentiment surrounding retail began to improve, with strong sales over the Black Friday weekend and on Cyber Monday and a gain in consumer confidence. The S&P Retail Index rose 0.7 percent, or 3.34 points, to 519.21, as the Dow Jones Industrial Average gained 0.3 percent, or 32.62 points, to 11,555.63.
Concerns about the luxe market have been bubbling up for some time.
“We started to lower our 2012 estimates of the luxury sector a few months ago,” said Stifel Nicolaus analyst David Schick. “There have been some signs already that the high end is a little softer.”
Even though Tiffany has been consistently strong, Kowalski’s comments are “important,” he said, explaining that the news is a “reset” for the market, which came out of the holiday weekend “feeling very good.”
But Tiffany’s vice president of investor relations, Mark Aaron, was a “little surprised” by the market’s reaction, and insisted that the company was just being “candid” and “certainly wasn’t implying doom and gloom.”
Although Tiffany has experienced declining sales in the U.K. for several quarters, Aaron said the jeweler is now noticing a deceleration in business in continental Europe, which “isn’t a surprise to the company and can’t be a surprise to investors, considering the headlines.”
“The Tiffany brand is definitely building awareness in Europe but it’s nowhere even close to hitting its maximum…there’s a strategic opportunity there,” he said. “Part of our success is that we’ve taken this long-term view. This is a brand that has weathered a lot of recessions over the years.”
The 174-year-old company’s third-quarter profits totaled $89.7 million, or 70 cents a diluted share, topping analysts’ estimates by 9 cents. This compared to year-ago income of $55.1 million, or 43 cents a share.
Sales for the quarter ended Oct. 31 rose 20.5 percent to $821.8 million from $681.7 million. The firm’s New York flagship increased 24 percent, which lifted sales 19 percent in the Americas to $387.7 million. Sales in the Asia-Pacific region gained 44 percent, as Japan’s sales increased 12 percent and Europe’s sales advanced 19 percent.
Tiffany extended its full-year profit outlook to $3.70 to $3.80 a diluted share, up from the $3.65 to $3.75 projected in August. Wall Street forecasted earnings per share of $3.71.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast