Tiffany & Co. said its holiday period sales were impacted by softer tourism spending in key markets in the U.S., but sales were strong in Japan and Europe.
As a result, worldwide net sales dropped 3 percent on a constant currency basis for the two-month period ended Dec. 31, 2015. Total comparable-store sales fell 5 percent. “There were no noteworthy differences in performance among jewelry categories,” the company said. “Reported in U.S. dollars, worldwide net sales of $961 million were 6 percent lower than the prior year.”
Due to the sales decline, net earnings for the fiscal year ending Jan. 31 is expected to decline about 10 percent, which compares to a prior forecast of a 5 to 10 percent drop in earnings. The prior year’s fiscal earnings per share was $4.20. “In addition, this forecast excludes a charge of approximately four cents per diluted share being recorded in the fourth quarter for staff and occupancy reductions,” the company added.
The retailer did not say how many employees were impacted.
Frederic Cumenal, chief executive officer, said in the holiday period, “we continued to feel pressure from the strong U.S. dollar on the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S., which we expect will continue into 2016.”
“We believe overall sales results were negatively affected by restrained consumer spending tied to challenging and uncertain global economic conditions and we expect 2015 earnings to come in at the low-end of our previously set range of expectations,” the ceo added.
“While financial plans for 2016 have not been finalized, management currently believes that the strong dollar and global macro challenges will likely result in minimal growth in net sales and net earnings, as reported in dollars and excluding charges in 2015, for the year,” the company said in its report. “All assumptions and expectations are approximate and may or may not prove valid.”
By region, at constant currency, comps declined 8 percent in the U.S. while total sales fell 5 percent. “Lower sales occurred across much of the U.S., exacerbated by lower foreign tourist spending in New York and certain other U.S. markets, which management attributes to the strong U.S. dollar,” the retailer noted.
In the Asia-Pacific region, same-store sales fell 9 percent on a constant-exchange basis as total sales dropped 6 percent. “A continuation of strong sales growth in China was more than offset by significant weakness in Hong Kong and Singapore, with varying performance in other markets,” the company said in its report.
But in Japan, same-store sales gained 10 percent, due to “local customers and foreign tourists.” Total sales rose 12 percent. In Europe, comparable-store sales fell 2 percent, but total sales came in with a 4 percent gain. Tiffany said there was “a notable decline in France, all of which reflected varying levels of demand among local customers and foreign tourists.”
As of the end of the reporting period, the company had 307 stores, with 125 in the Americas, 56 in Japan, 81 in Asia-Pacific and 39 in Europe. And it operated five stores in the United Arab Emirates as well as one in Russia. This compares to 296 stores in the same period last year with 123 in the Americas, 56 in Japan, 73 in Asia-Pacific and 38 in Europe as well as five in the United Arab Emirates and one in Russia.