Tiffany cuts view in warning sign for luxury

     In a warning sign that the outperforming luxury sector may be showing some signs of strain, Tiffany & Co. on Tuesday cut its full-year profit outlook after holiday season sales of fine jewelry slowed “markedly” in the U.S. and Europe.   tory burch
Tiffany TIF shares slumped 11% in late morning after having risen 10% in the past year. Rival Signet Jewelers Ltd. SIG dropped 5.8%. Online jewelry retailer Blue Nile Inc. NILE was down 4.5%.   tory burch shoes
Tiffany cut its adjusted profit outlook in the year ending Jan. 31 to a range of $3.60 to $3.65 from a previous guidance of as much as $3.80 that it gave in November. The New York-based company plans to release final results March 20.   tory burch sale
The lowered outlook echoed what Tiffany said in late November, when it signaled sales weakness in Europe and the eastern U.S. The holiday quarter represented almost half of the company’s adjusted annual profit in the prior year, FactSet data showed.   tory burch flats
The warning marked a contrast from the first three quarters of the year, when Tiffany reported continued strong upscale demand for expensive items including high-end statement and engagement jewelry such as a $90,000 sapphire ring with round diamonds that usually cost at least thousands to tens of thousands of dollars. See Tiffany’s outlook pinched by Europe and U.S.   tory burch flip flops
Tiffany’s warnings also raised concerns about the resurgent demand in the luxury sector. Chains including Saks Inc. SKS -1.52% and Nordstrom Inc. JWN last week reported solid holiday sales with fewer promotions compared to the rest of their industry peers, analysts said. Saks shares were down 2.8%. Nordstrom was little changed.   tory burch reva
The declining Wall Street bonuses and the debt crisis in Europe may also have hurt Tiffany more because of the pure discretionary nature of its products compared to buying a functional and fashionable handbag or coat at Saks, analysts said.   tory burch sandals
“The December period is a wakening for the top 1% of consumers,” said Candace Corlett, president of consultancy WSL Strategic Retail, in an interview. “The affluent shoppers have certainly picked up spending, but there’s no question that Wall Street bonuses are leaner. Tiffany is the ultimate luxury.”
The debt woes and fiscal crisis in Europe have hurt not only Tiffany. Teen retailer Abercrombie & Fitch Co. ANF also has reported a hit in Europe. The concerns have raised worries about other brands including Coach Inc. COH and Ralph Lauren Corp. RL that are expanding in the region. Coach shares dipped 0.4%.
Tiffany’s worldwide sales in the two months ended Dec. 31 rose 7% to $952 million, led by double-digit growth in Asia and Japan. Excluding the currency impact, comparable sales rose 4%.
In the Americas region, which includes the United States, Canada and Latin America, sales rose 4% to $503 million. On a constant-exchange-rate basis, total sales increased 4% and comparable store sales rose 2%. Comparable Americas’ branch store sales rose 3% and New York flagship store sales, about 8% of the company’s total, declined 1%.
Different from the prior quarters when local shoppers also opened their wallets, the company said higher sales to tourists from outside the U.S. were partly offset by weakness in spending by U.S. customers. Combined Internet and catalog sales in the Americas were 4% below last year.
Some analysts said even the tourist spending also has been slowing. “The biggest issue is the decline of European tourists, always key to flagship, and not replaced by Chinese, due to visa delays 60 days longer than U.K. or France,” Craig Johnson of Customer Growth Partners said.
U.S. luxury retailers including Saks has said the U.S.’s delayed visa processing for Chinese tourists has put them at a competitive disadvantage compared to their European luxury retail rivals as it’s easier for Chinese tourists to go to Europe than to the U.S.
Tiffany’s sales in the Asia-Pacific region increased 19% to $165 million. Minus currency impact, sales increased 18% and comparable store sales increased 12% due to growth in most countries.
In Japan, sales increased 13% to $160 million. Excluding translation impact, sales rose 5% and comparable store sales increased 6%.
Sales in Europe increased 1% to $117 million. On a constant-exchange-rate basis, total sales increased 2% and comparable store sales declined 4%, reflecting modest sales growth in Continental Europe and lower sales in the U.K.
“Despite near-term headwinds in the U.S. and Europe, given its leadership in high-end jewelry retailing and growing global brand awareness and market penetration, we think (Tiffany) remains an attractive long-term investment,” said Standard & Poor’s analyst Jason Asaeda.
Other sales, which primarily include wholesale sales of finished products to independent distributors within emerging markets and wholesale sales of rough diamonds, increased 8% to $8 million.
This is the original authors, welcome to reprint. Reprint, please indicate the source.
References:    Tiffany cuts view in warning sign for luxury