Tiffany says sales to Chinese tourists are in free fall due to trade war

Luxury jewelery company Tiffany & Co. attributed disappointing quarterly results to the sharp drop in Chinese tourism, the company said on Tuesday.

After reducing its profit outlook for the entire year to growth of 1 to 2%, Tiffany cited a "dramatic" drop in tourism spending.

"Tourists in the United States represent a small double-digit percentage of our total US sales, and we have seen a sharp drop in sales to US tourists of the order of 25%. for Chinese tourists, "said Tiffany chief executive, Alessandro Bogliolo, said during the company's conference call.

Since the beginning of May, tensions between the United States and China have increased while the two largest economies in the world are struggling to reach a trade agreement. A broken trade agreement with China has led President Donald Trump to raise tariffs on Chinese goods worth $ 200 billion. In retaliation, Beijing has applied tariffs on imports worth $ 60 billion.

China's Foreign Ministry on Tuesday warned Chinese citizens not to visit the United States, the state-owned CCTV television channel said. Beijing has warned those who work, study and travel in America.

Mark Erceg, chief financial officer and executive vice president of Tiffany, said the company "was affected by the low spending of foreign tourists". However, Tiffany is also affected by "the recent imposition of higher duty rates on the jewelry products we export from the United States to China and by our decision not to significantly increase our retail prices. China at the moment, "added Erceg.

For the first quarter, the jewelry maker's net profit decreased by 12% to $ 125.2 million, or $ 1.03 per share. According to Refinitiv, badysts expected earnings per share of 1.02 USD.

Tiffany achieved a turnover of $ 1.003 billion, down 3% and missing the forecast of $ 1.015 billion announced by badysts. The Company's comparable store sales have missed estimates in all regions. In the United States, same-store sales fell 5%, compared to an estimated 1.2%.

The largest decline in comparable sales was in Europe, down 7%, while the expected increase was 1.8%.

After falling before marketing, Tiffany shares closed up 2.6% on Tuesday. Shares have risen nearly 15% so far this year.

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