Change is afoot at Tiffany & Co.
Michael J. Kowalski, Tiffany’s chief executive officer for 15 years, will retire from the company on March 31. Succeeding him on April 1 will be Frederic Cumenal, the company’s president.
The change will have Tiffany following a recent trend to separate out the positions of ceo and chairman, as Kowalski will stay on as non-executive chairman.
Although shares of Tiffany slipped 0.6 percent to close at $99.09 on Monday in trading on the Big Board, Citigroup’s Oliver Chen said the news of the executive change is a “strong next step in driving global brand growth.” The analyst has a “buy” rating on the stock and a price target of $110 a share.
He added that the separation of the ceo and chairmanship roles is a “positive,” and that Kowalski’s continuation as chairman is a “positive for continuity.”
More specifically, Chen said, “We expect Tiffany to benefit most from Cumenal’s global vision for the brand, enhanced customer experience and selling initiatives, more engaging customer relationship management programs and continued prioritization of self-purchase driven revenue.”
The analyst said the appointment also supports Tiffany’s plans to intensify the focus on the brand in new markets, particularly Asia. The company’s international sales are 52 percent of its business, with Asian tourists driving 25 percent of revenues globally, the analyst estimated.
In the first quarter ended April 30, net income rose 50.3 percent to $125.6 million, or 97 cents a diluted share, from $83.6 million, or 65 cents, in the year-ago quarter. Revenues picked up 13 percent to $1.01 billion from $895.5 million in the 2013 quarter. While sales in the Americas region rose 8 percent, total sales in the Asia-Pacific region grew 17 percent and in Japan total sales surged 20 percent. In Europe, sales increased 9 percent.
International has become a major component of the upscale jewelry firm’s business. At the end of the first quarter, the company operated 292 stores: 121 in the Americas; 72 in Asia-Pacific; 55 in Japan; 38 in Europe; five in the United Arab Emirates, and one in Russia.
Kowalski said, “I am immensely satisfied by what we have accomplished at Tiffany over the past 30 years, and I am confident that the company is superbly positioned for the future.”
Kowalski, 62, joined Tiffany in 1983 as director of financial planning. He held a variety of merchandising management positions and was executive vice president from 1992 to 1996. He joined the board in 1995 and was elected president in 1997. Kowalski became ceo in 1999. He became chairman in 2003 following the retirement of William R. Chaney.
Cumenal, 54, joined the jewelry retailer in 2011 as executive vice president. He oversaw worldwide sales and distribution. Last year, his responsibilities expanded to include design, merchandising and marketing functions, and he was promoted to president and appointed to Tiffany’s board. Cumenal is also the former president and ceo of the Moët & Chandon unit of LVMH Moët Hennessy Louis Vuitton. A veteran of Procter & Gamble, he joined LVMH in 1995 as European director of Moët & Chandon and later became managing director of Moët Hennessy Europe.
Cumenal said, “This is an extraordinary company with a fantastic heritage and an exciting future.”
The expectation is that Tiffany will continue to drive sales with product aimed at a more trend- and cost-conscious clientele.
Francesca Amfitheatrof, a trained silversmith, was named design director last year. According to Citigroup’s Chen, “Fashion jewelry saw improvement in the first quarter driven by the expanded Atlas Collection, colored diamonds and other gemstones.” Generally priced at less than $2,000 and representing 40 percent of the mix, Chen said there’s room for fashion jewelry to reach the growth levels of other categories, concluding that one will likely see continued growth in the fashion jewelry category with Amfitheatrof’s launch in September.
During his tenure, Kowalski has overseen many of the brand’s recent creative endeavors and initiatives.
On the design front, Kowalski welcomed a number of jewelry collections. In 2003, Tiffany & Co. teamed with architect Frank Gehry on an exclusive collaboration, which launched in 2006. For the company’s 175th anniversary in 2012, Tiffany & Co. introduced Rubedo, a trademarked metal introduced via a collection of cuffs and rings done in the new material. The anniversary celebration also saw the company’s iconic 128.54-carat Tiffany Diamond reset for the fifth time. Most recently, Tiffany & Co. has introduced several in-house designs, such as Tiffany Keys in 2013 and this year’s revamp of the Atlas collection, introduced in 1995.
Last year, it provided archival and new pieces to costume designer Catherine Martin for Baz Luhrmann’s remake of “The Great Gatsby.” Capitalizing on the film’s buzz, the brand introduced The Great Gatsby Collection in April 2013, consisting of seven pieces, including a 5.25-carat diamond ring priced at $875,000.