By Brecken Branstrator
This fall, Tiffany introduced “True,” its first new engagement ring line since 2011. Sales of engagement jewelry grew 2 percent in the third quarter and are up 7 percent year-to-date, the retailer reported Wednesday.
New York—Lower spending by Chinese tourists at Tiffany stores in the United States and Hong Kong put a dent in the jeweler’s third quarter results despite higher spending by locals.

Tiffany & Co. reported Wednesday that for the third quarter ended Oct. 31, same-store sales in the Americas rose 5 percent over last year and are up 7 percent year-to-date.

Net sales are up 5 percent (6 percent on a constant-exchange-rate basis) year-over-year to $442 million. Year-to-date, net sales in the region have risen 7 percent to $1.3 billion.

Worldwide, Tiffany saw same-store sales increase 2 percent (3 percent on a constant-exchange-rate basis) year-over-year in the quarter and net sales climb 4 percent (5 percent on a constant-exchange-rate basis) to $1.0 billion.

Year-to-date, net sales are up 9 percent and same-store sales have risen 6 percent on a constant-exchange-rate basis.

Product-wise, sales of jewelry collections—items like Tiffany T, Return to Tiffany and the new Paper Flowers collection—were stronger than any other category, rising 8 percent year-over-year in the third quarter. They are up 15 percent year-to-date.

Sales of design jewelry (Elsa Peretti, Paloma Picasso, etc.), meanwhile, fell 8 percent in the period but are up 3 percent year-to-date.

Engagement jewelry sales rose 2 percent in the third quarter and have increased 7 percent year-to-date.

During the company’s earnings call Wednesday morning, CEO Alessandro Bogliolo said the third quarter results were “close to our expectations,” with lower spending by Chinese tourists visiting Hong Kong and the United States and lower wholesale travel-retail sales in Korea subtracting from increased spending by locals in each market.

Analysts on the call asked numerous questions about customer response to the changes Tiffany has made over the past few months, including its new jewelry marketing campaign and the introduction of fresh product, like Paper Flowers and the new “Tiffany True” engagement ring.
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“As management our, my, constant obsession is to see day to day how these (changes) impact the fundamentals of our business,” Bogliolo said in response to one analyst.

The overall results have been positive.

Over the last nine months, he said Tiffany has seen a “substantial” increase in traffic in both its physical stores and website, and the conversion rate is up in the third quarter and year-to-date, he said.

Tiffany is increasing sales is both new and existing customers, with Bogliolo noting on the call: “The new messaging of the brand is resonating with new customers, but it is not alienating existing customers.”

When asked about the jeweler’s plans for next year, he did not provide any specifics, stating only that Tiffany has a “strong pipeline” for innovation for next year.

Tiffany’s outlook for the fiscal year remains unchanged; it forecasts a mid-single-digit increase in same-store sales for the year, with Bogliolo noting that the retailer just entered its most critical period of the year, the fourth quarter.

“Internally we have [done all]—product, marketing, training, CRM—that we could do. Now everything is in the hands of customers and their propensity to buy.”

Tiffany has opened nine stores and closed three globally so far this year.

As of Oct. 31, the retailer operated 321 worldwide, including 124 in the Americas. At this time last year, Tiffany had 315 stores, including 125 in the Americas.

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