Bernard Arnault’s latest gem might need a little polishing when he finally gets it into the LVMH Moët Hennessy Louis Vuitton portfolio.
Tiffany & Co., which is set to become part of LVMH in a $16.2 billion deal next year, reported third-quarter declines in both profits and comparable sales.
The New York-based jeweler’s net earnings fell 17.4 percent to $78.4 million, or 65 cents a diluted share, from $94.9 million, or 77 cents, a year earlier. That was 20 cents below the 85 cents analysts projected.
Sales for the three months ended Oct. 31 inched up to $1.014 billion from $1.012 billion with a 4 percent drop in comp sales. Revenues in the company’s home market, the Americas, fell 4 percent to $423 million.
Alessandro Bogliolo, Tiffany’s chief executive officer, said: “Our underlying business remains healthy with sales attributed to local customers on a global basis growing in the third quarter, led by strong double-digit growth in the Chinese mainland offset in part by softness in domestic sales in the Americas. We are continuing to amplify the brand with the recent colorful extension of Tiffany T, the launch of the men’s collection, the unveiling of the Tiffany & Love fragrance pillars and our ‘Very, Very Tiffany Holiday’ campaign.”
Bogliolo added: “We are very excited about the recently announced transaction with LVMH and, pending the required approvals, look forward to becoming part of the LVMH family of exceptional luxury brands.”
Tiffany, like the rest of the luxury world, has been looking to Asia as a growth engine, but is still building scale. Hurt by currency translations, the company’s sales in the Asia-Pacific region were flat at $293 million in the third quarter with a comp decline of 2 percent. In constant currencies, the region saw a 3 percent sales increase with a 1 percent comp rise.
Growth in mainland China has been offset by disruptions in Hong Kong, where protests have hit the retail business hard.
Sales in Japan continued to be strong and increased 19 percent to $169 million.
This will be one of Tiffany’s last quarterly reports as a public company. As part of LVMH, it will be able to focus more readily on building its business for a future measured in decades, not months.