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FinancialsNov 24, 2020
Tiffany’s Q3 Buoyed by Online, Asia-Pacific Sales
The jeweler’s retail sales in mainland China were up more than 70 percent in the third quarter.
The “Five Golden Schlumberger Rings” ($210,000) featured in Tiffany & Co.’s 2019 high-end holiday gift guide. Worldwide net sales in the third quarter were down just 1 percent.
New York—Tiffany & Co.’s worldwide sales showed signs of hope in the third quarter, bolstered by a strong performance in the Asia-Pacific region and soaring online sales.
Worldwide net sales in the third quarter slipped 1 percent year-over-year to $1 billion, compared with around $1 billion a year ago. Same-store sales were up 3 percent.
Quarterly net earnings climbed 52 percent year-over-year to $119 million.
In the first nine months, worldwide net sales fell 25 percent to $2.3 billion, compared with $3.1 billion a year ago, while comparable sales sank 22 percent.
Year-to-date net earnings were $86 million, down 75 percent compared with last year.
Tiffany’s e-commerce business thrived, up 92 percent worldwide in the third quarter.
Online sales now account for 12 percent of total sales year-to-date, double the 6 percent reported in the last three fiscal years.
“We had a strong third quarter both in sales on a relative basis and terrific results in profitability on an absolute basis, which speaks volumes about the enduring strength of the Tiffany brand and gives us confidence as we enter the important holiday season,” said CEO Alessandro Bogliolo in a press release about the results.
In the Americas, where the most Tiffany stores are located, net sales in the third quarter fell 16 percent to $354 million with same-store sales down 15 percent. Year-to-date sales were down 36 percent to $826 million with same-store sales down 35 percent.
The decline in sales was attributed to the decline in foreign tourism coupled with the effects of COVID-19 and the store closures, which affected Tiffany from March to June.
The Asia-Pacific region was a stand-out on its balance sheet with third-quarter net sales climbing 30 percent to $382 million and same-store sales up 40 percent. Year-to-date sales were down 7 percent to $854 million with same-store sales up 3 percent.
In mainland China, retail sales were up more than 70 percent with comparable sales doubling compared to the prior year.
Retail sales in mainland China and Korea remained strong, offsetting the weaknesses in other regions due to COVID-19, store closures, and a decline in wholesale travel retail sales. Online sales in the region also performed well.
In Europe, sales fell 6 percent to $104 million in the third quarter with same-store sales down 6 percent, also attributed to COVID-19 disruptions. Year-to-date sales were down 24 percent to $249 million
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with same-store sales down 25 percent.
In Japan, sales declined 8 percent in the quarter to $156 million with same-store sales down 4 percent, due to a decline in tourist traffic. Year-to-date sales were down 25 percent to $353 million with same-store sales down 23 percent.
Sales from the “other” segment, which includes five Tiffany stores in the United Arab Emirates, sank 30 percent to $12 million due in part to lower wholesale sales of diamonds. Year-to-date sales were down 59 percent to $28 million.
By category, sales from Tiffany’s jewelry collections, which includes lines like “Paper Flowers,” were up 7 percent in the quarter and down 21 percent year-to-date.
Engagement jewelry sales were down 6 percent in the quarter and down 21 percent year-to-date.
Sales of jewelry from designers Elsa Peretti, Paloma Picasso and Tiffany & Co. Schlumberger fell 6 percent in the third quarter and 23 percent year-to-date.
Bogliolo highlighted the “noteworthy” performance of T1, its new gold and diamond collection, adding it’s been received well in all markets and channels.
As of Oct. 31, there were 320 Tiffany stores in operation worldwide, including 122 in the Americas, two fewer than a year ago. Tiffany opened 2 stores and closed 8 others so far this year.
Looking to the fourth quarter, the company expects to see “significant” expenses related to its acquisition by LVMH. Total net sales are expected to decline a mid-single-digit percentage.
Tiffany did not hold an earnings call due to its pending acquisition.
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