Tiffany & Co. now finds itself at the center of the luxury debate. The jeweler early Tuesday named Reed Krakoff as its chief artistic officer, noting that current design director Francesca Amfitheatrof would step down.
The announcement threw analysts and industry folk for a loop, with some rationalizing that this could mean Tiffany is looking to further hedge its bets on the affordable luxury market, rather than the elevated luxury cotillion it was understood to be chasing.
As pondered in a note issued by Goldman Sachs’ equity research team today: “Tiffany announced an evolution of its approach to accessibly luxury several quarters ago, giving new focus to fashion jewelry in the below-$500 price-point range, with expanded product offerings and greater marketing support. It is not clear whether Mr. Krakoff’s expanded roll — given his expertise and long history in accessible luxury — signals an even greater push for Tiffany along these lines.”
If so, the company will find itself knee-deep in nimble competition. This demi-fine jewelry category in which it hopes to succeed is booming. Much of the market share, though, is devoted to delicate designs by Millennial-upstart brands like Catbird, Wwake and Kataoka. Legacy firms, such as Tiffany, have yet to infiltrate this field.
In looking to lower its average price point, Tiffany would be sending mixed messages. The firm has made strides in the last year to elevate its brand through retail partnerships with luxury dealers like Net-a-porter and Dover Street Market. A tie-up with contemporary jewelry designer Eddie Borgo — revealed in October — saw pieces priced at up to $12,500. The Dover Street Market capsule collection of archival designs included a $1,000 sterling-silver party hat.
Tiffany stood by its luxury positioning and Krakoff’s role. “We maintain our commitment to excellence in design, using the finest materials and craftsmanship, and Reed’s appointment does not reflect a move by the brand to broaden our accessibility at lower price points. Reed understands luxury, and the impeccable purity of design required for jewelry,” the firm told WWD.
Amfitheatrof, who is leaving the jeweler “to pursue other opportunities,” according to a Tiffany statement, attempted to release evergreen mass-market collections in her three-plus years with the firm. Among her introductions were the Tiffany “T” range of linear designs and an updated “Return to Tiffany” product offering. These designs, however, failed to catch on with the same fervor that Tiffany sterling silver, hangtag jewelry held in the late Nineties and early Aughts.
The designer had joined the brand in 2013 with expectations that she would bring a younger touch to some of the iconic company’s collections. Amfitheatrof became the design face of the brand, hosting events and giving magazine interviews as it attempted to attract a younger customer. But there has been speculation over the last few months that many of Amfitheatrof’s collections failed to perform strongly at retail.
Tiffany & Co. has a long history of collaborators, previously providing platforms for designers including Paloma Picasso and Jean Schlumberger.
As such, few ears were raised this July when it was announced that Krakoff was brought on as a creative collaborator for home furnishings and accessories — with the first results scheduled to launch for the 2017 holiday season.
The announcement stipulated that Amfitheatrof was to design jewelry, and Krakoff the remaining categories — with both reporting to chief executive officer Frederic Cumenal.
This initial tie-up with Tiffany was to be Krakoff’s first major step since closing his namesake brand in 2015. Prior to that he had long served as president and executive creative director for Coach Inc. — leaving the leather goods house in 2014 to pursue his own label.
In his new role, Krakoff will lead design of the jewelry and luxury accessory categories, “and lead the brand’s overarching artistic and design vision with respect to stores, e-commerce, marketing and advertising,” said the Tiffany’s statement.
“Reed’s extraordinary talent and deep understanding of iconic American design, and Tiffany’s defining role in its legacy, make him poised for great success in this new position. His expertise and creativity will continue to help build Tiffany as a global house of luxury,” said Cumenal.
Said Krakoff of his appointment: “I’m honored to join Tiffany as chief artistic officer and fully dedicate my creative focus to this storied American luxury brand. The exceptional opportunity to further Tiffany’s rich creative legacy of design and craftsmanship, and join the incredible talent within Tiffany, is truly inspiring.”
Over the summer, he told WWD: “I grew up with [Tiffany], it’s a brand that has a lot of strong emotional attachment, I have an emotional attachment. To be able to contribute to the heritage and history of a global brand that combines design, quality and craftsmanship is really rare today and I think Tiffany is a leader in that. To be part of that is really exciting to me.”
At the time, he categorized his intentions for the jeweler as mash-up of classic Tiffany design and personal aesthetic influences: “It’s going to be an amalgamation of historical Tiffany icons and my own modernist taste, and looking at that through a lens of how things are made, of quality, craftsmanship.”
The company saw improvements in profits and sales in the third quarter, but remained cautious on its outlook for the year.
In reporting its 2016 holiday sales today, Tiffany cited worldwide net sales had increased $5 million over last year — rising to $966 million. It noted that while sales had grown in Asia-Pacific — particularly in Japan — this success was diluted by flagging sales in the Americas and Europe. Worldwide comparable store sales fell by 2 percent.
“In the Americas, both total sales of $483 million and comparable store sales were 4 percent below the prior year,” the company said in its statement. The U.S. sales decline was exacerbated by a 14 percent drop at the ‘s flagship on Fifth Avenue in New York, “which we attribute at least partly to post-election traffic disruptions” near Trump Tower.
Cumenal said of Tiffany’s holiday performance in a statement: “These overall holiday period sales results were somewhat lower than we had anticipated, but we continue to benefit from a favorable gross margin and prudent expense management. Although we do not anticipate any significant improvement in 2017 to the macroeconomic challenges that we faced this year, we continue to focus on our initiatives to enhance our stores and our customers’ experience, and to add newness to our product assortment, while maintaining effective marketing communications and a well-developed supply chain. We believe executing on these initiatives, which are within our control, will contribute over the long term to strengthening Tiffany’s competitive position among global luxury brands.”
The company’s shares dipped 2.45 in trading on Tuesday to close at $79.90.