Tiffany’s U.S. Holiday Sales Down 31%

-- JCK-Jewelers Circular Keystone, 1/14/2009 7:21:00 AM

Luxury jewelry retailer Tiffany reported Wednesday that worldwide net sales for the November-December holiday period declined 21 percent to $687.4 million, from $867.3 million a year ago. Same store sales declined 25 percent for the period. On a constant-exchange-rate basis—which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars—net sales declined 20 percent and same store sales fell 24 percent.

In the Americas, sales declined 30 percent to $385.9 million for the holiday period, year over year. U.S. net sales fell 31 percent and same store sales dropped 35 percent with similar declines experienced in the New York flagship store and across the branch stores, the company said. Combined Internet and catalog sales in the U.S. declined 21 percent. Sales in local currencies rose in Tiffany's stores in Canada and declined in Latin America.

“Deteriorating global economic conditions were clearly reflected in cautious spending by Tiffany customers across the entire range of jewelry categories and price points,” said Michael J. Kowalski, Tiffany chairman and chief executive officer. “We believe these conditions will continue well into 2009. Nevertheless, we are committed to maintaining healthy profitability and are reviewing all elements of our cost structure.”

Tiffany reported smaller loses for its stores in the rest of the world.

In Asia-Pacific, sales declined 2 percent to $216 million in the holiday period. On a constant-exchange-rate basis, sales and same store sales declined 8 percent and 13 percent during the holiday period. Sales softened progressively in many countries over the course of the holiday period, the luxury jeweler said.

In Europe, sales decreased 4 percent to $79.2 million for the holiday period. On a constant-exchange-rate basis, a 19 percent sales increase included a 3% comparable store sales decline and incremental sales from new stores.

Japan was the only region of the world where the retailer saw growth with a 5 percent increase in net sales (down 12 percent in a constant-exchange-rate basis) and a 2 percent increase in same store sales (down 15 percent in a constant-exchange-rate basis).

In its other Asia-Pacific stores, net sales fell 14 percent and same store sales declined 19 percent.

The company operates 206 TIFFANY & CO. stores and boutiques (86 in the Americas, 96 in Asia-Pacific and 24 in Europe), versus 185 locations a year ago (81 in the Americas, 87 in Asia-Pacific, and 17 in Europe).

Other sales decreased 53 percent to $6.3 million in the holiday period primarily due to reduced wholesale sales of diamonds.

“The holiday season represents the largest portion of fourth quarter sales, so we do not expect any improvement for the quarter that will end on Jan. 31,” Kowalski said. “Based on that, net earnings will decline in the fourth quarter. For the full year, we expect net sales of approximately $2.85 billion.”