Tiffany & Co., whose business practices have come under fire by its now-reluctant acquirer LVMH, announced that its sales declined in September and October even as profits soared.
LVMH agreed to acquire Tiffany last year for $16.2 billion, but is now arguing that Tiffany’s pandemic-related problems represent a “material adverse event” that requires the deal be canceled. Tiffany has filed suit to hold LVMH to the deal in the Delaware Court of Chancery.
Tiffany typically releases financial information by quarter, rather than by two-month periods, so it certainly appears that the company has released this information as a preemptive rebuttal to any arguments LVMH intends to make in court.
According to Tiffany, worldwide net sales for the two-month period declined slightly from the year. However, operating earnings jumped approximately 25% over last year.
A statement said that sales in mainland China were “extremely strong” over the last two months, and sales to the United States were, well, better.
U.S. sales declined over the last two months by a “low double-digit percentage” compared to last year, it said. That’s a big improvement, considering sales to the Americas region fell 45% earlier in the year.
Tiffany said it “expects the sales trends in the United States to further improve in the fourth quarter.”
It noted that global e-commerce sales also showed improvement, representing 13% of total net sales year to date. Traditionally, e-commerce represented only 6% of Tiffany’s total net sales.
“While we still expect full-year results to be substantially impacted by COVID-19,” said chief executive officer Alessandro Bogliolo in a statement, “we are very pleased with the way the business has rebounded following the first quarter and continues to rebound in the third quarter, especially in mainland China, and to recover in the United States.”
It also pointed out that it has $1 billion of cash on hand as of Sept. 30.
JCK’s editors discussed the LVMH/Tiffany dustup in the latest episode of JCK’s podcast, The Jewelry District.
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