Despite a nice bump up in holiday sales, Tiffany & Co.’s chief executive officer Alessandro Bogliolo said the company needs to keep moving its product offering forward — and spending to revamp operations — to truly overcome the negative trend from earlier in the year.
Tiffany’s sales for November and December combined rose 8 percent to $1.05 billion, with a 5 percent gain in comparable-store sales. On a constant currency basis, net sales increased 6 percent with a 3 percent comp gain. The gain is broadly in keeping with trends in the market, which saw many retailers bounce back after a tough year with solid holiday sales.
Bogliolo, who took the reins in October, said the growth came from across categories, regions and distribution channels. He also noted the brand’s major fashion jewelry collections performed well and that customers were engaged with its fine jewelry, watches and home and accessories collections.
Bogliolo seems to have stepped into the ceo slot just as business improved. For the first nine months of the year, Tiffany’s comparable sales fell 2 percent.
“While we are encouraged with the holiday sales results, we believe that the preceding negative comparable-store sales trend can only be reversed on a sustainable basis by continuing to evolve our product offerings and customer experience and also by stepping up certain strategic spending in our business, all of which is reflected in our preliminary 2018 plans and earnings outlook,” Bogliolo said. “Nonetheless, our holiday period results confirm that the Tiffany & Co. brand is strong, and we are excited about our numerous long-term global opportunities to capitalize on that strength.”
Heartened by the holiday boost, Tiffany is now looking for a fiscal 2017 sales gain of about 4 percent with a double-digit percentage gain in diluted earnings per share. The estimate does not include any benefit from changes to the tax law by President Trump just before Christmas.
And in fiscal 2018, Tiffany is looking for a midsingle-digit increase in sales while earnings per share come in flat to slightly down as the company increasing spending on technology, marketing, visual merchandising, digital and store presentations.
Wells Fargo analyst Ike Boruchow noted that “Despite the top-line momentum, management struck a somewhat cautious tone for their initial fiscal year 2018 earnings.”
Boruchow said it appeared that management was reinvesting its savings from the tax law change — which could amount to 35 cents to 40 cents a share — and putting them back into the business to drive long-term growth.
“This could pay off in the long run, as Tiffany’s top-line performance has been choppy for the past few years, potentially requiring significant investment to reinvigorate growth,” he said.
Investors, supportive of the company’s trajectory, traded shares of Tiffany up 1.3 percent to $108.99 on Wednesday.