With most of its stores shut due to COVID-19, Tiffany posted bleak results for the first quarter of fiscal 2020—but management didn’t address reports that LVMH was taking a fresh look at its pending acquisition of the retailer, given ongoing unrest in the United States.
A statement from chief executive officer Alessandro Bogliolo noted only that the acquisition had been cleared by antitrust authorities in Russia and Mexico—and that it hoped to complete the merger by the middle of the year.
“I am confident that Tiffany’s best days remain ahead of us, and I am excited we will be taking that journey with LVMH by our side,” he added.
WWD and Reuters have reported that LVMH management was concerned that it “overpaid” for the retailer, which it agreed to buy for $16.2 billion last November. It was said to be especially concerned about the stability and economic outlook of the United States, where Tiffany has most of its stores.
The company’s worldwide sales for the quarter (ended April 30) fell 45% to $556 million, with comps plunging 44%. The company posted a $65 million net loss for the period.
Like many retailers, Tiffany has had to deal with store closures in all its markets due to COVID-19. Approximately 70% of its stores worldwide were closed in April. By May 29, approximately 80% of its stores globally had been fully or partially opened.
On May 31, following widespread protests following the death of George Floyd, Tiffany again closed its U.S. retail locations, though it reopened them on June 8. Currently, approximately 55% of its U.S. stores have been fully or partially reopened.
The drop in brick-and-mortar sales was partially offset by e-commerce gains; from February 1 through May 31, Tiffany’s worldwide e-commerce sales equaled approximately 15% of total sales, versus the 6% they account for traditionally.
Bogliolo said the company was particularly pleased with its performance in China, which has largely reopened following a two-month lockdown.
Our results “indicate that a robust recovery is underway,” he said. “Retail sales in mainland China were down approximately 85% and 15% during the first and second months of the quarter, but up approximately 30% during April, each as compared to the same period in the prior year.”
May sales in China were even better, he said, leaping 90%.
A statement said that Tiffany drew down $500 million on its credit facility during the three months ended April 30 as a precautionary measure. On Monday, it negotiated amendments to three of its existing credit facilities.
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