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Tiffany & Co on Wednesday announced a quarterly turnover lower than estimates, as Chinese tourists spent less than expected on jewelry stores in the United States and Hong Kong, a deficit that drove their shares down 13 percent. %.
Investors were also disappointed by the company's inability, 181 years old, to raise its earnings outlook for the full year of the fiscal year ahead of the holiday season and by the growth sales by store slower than expected.
Tiffany shares fell 11.8% to close at $ 92.54.
CEO Alessandro Bogliolo tried to reassure investors that while spending outside China was down, sales in the country were robust.
"We can speculate on the reasons for tourism spending outside of China, but the reality is that the Tiffany brand appeals to Chinese customers, as evidenced by the continued strong growth in mainland China sales during the quarter," he said. he declares. .
Part of the increase in demand in mainland China could be attributed to Tiffany's lower prices in the country after the Chinese government cut tariffs on luxury goods, he said .
Bogliolo said Tiffany was transferring more stocks to mainland China, where customers are spending more than overseas.
"When it comes to tourism, we try to keep track of customers while spending, we are increasing our stocks in China because demand in this country has increased," Bogliolo said.
"The decline in spending by Chinese tourists is worrisome and may reflect tense relations with the United States," said Ken Perkins, founder of research firm Retail Metrics, citing the trade dispute between the two countries. "China's growth has slowed down and it is encouraging to see that strong spending in mainland China is encouraging."
Tiffany expects an annual profit of $ 4.65 to $ 4.80 per share. Analysts estimated an average of $ 4.83 per share.
The unchanged outlook, among other things, reflected Tiffany's planned increases in marketing expenses to attract young buyers to its stores and expenses related to the renovation of its flagship store in New York, the company said.
The jeweler has refreshed his collections with more affordable items such as pendants and earrings to appeal to millennia attracted to cheaper competitors like the Danish Pandora A / S and Signet Jewelers.
Bogliolo said the company had also invested in marketing to specifically reach Chinese customers and tourists.
"Of course, if there are fewer Chinese tourists traveling, we are diverting our media from tourist destinations – airports, etc. – to the benefit of national, usually digital, media," he said, citing the recent launch of its platinum and diamond Paper Flowers collection in China.
The New York-based company's net income fell to $ 94.9 million, or 77 cents a share, from $ 100.2 million, or 80 cents a share, a year earlier.
Total revenues increased 3.7% to $ 1.01 billion.
Analysts expected an average profit of 77 cents per share for a business turnover of 1.05 billion dollars.
The company's same-store sales, excluding currency fluctuations, increased 3%, while analysts expected an average increase of 5.3%, according to Refinitiv's IBES data.
(Reuters)
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