Tiffany’s U.S. Sales Hurt by “Quite Fickle” Consumers

The volatile financial markets and tense election have hurt sales, its CEO says

The Blue Box had a blue 2015, with foreign exchange issues and an erratic U.S. consumer hurting the company’s sales.

In its latest financial results, Tiffany & Co. pronounced the overall year “disappointing.” Sales fell 3 percent in dollar terms to hit $4.1 billion, but rose 2 percent on a constant exchange basis. Net earnings for the year totaled $493.8 million, a 9 percent fall from the prior year.

In the United States, Tiffany was hit both by decreased sales from foreign tourists due to a strong dollar—a perpetual problem over the last year—as well as erratic sales from domestic customers, particularly in the fourth quarter, a factor it had not previously mentioned.

In a conference call following the release of the results, CEO Frederic Cumenal said U.S. consumer behavior “has been quite fickle. We can put that partly on the economic uncertainty, on the volatility of the financial markets, and a particularly tense [election].”

Cumenal said the company is prioritizing a better store experience with a focus on clienteling and better visual merchandising.

“We are raising the level of mind-set…around what I call a service signature that is beyond excellence,” he said. “We are deploying very aggressively and generally training and coaching, and we have big programs. They are ongoing, and there is not a D-Day around that, not a day where things are done.”

Vice president of investor relations Mark Aaron called statement jewelry one of Tiffany’s strongest performing categories. Engagement jewelry underperformed, though a new marketing campaign is intended to address that, he said. Its new products have been well received, in particular the Tiffany T collection and its new watch lines.

It is also updating many of its classic collections and putting a greater emphasis on “newness,” Cumenal said.

“We are going to continue to focus on Tiffany T as an icon and we will continue to focus on newness,” he said. “We will continue to refresh and to introduce new things.”

Sales in other markets, including Asia-Pacific, Europe, and Japan, all rose. However, Cumenal said Hong Kong “continues to be a nightmare. This is true for all luxury players. We don’t know when it will bottom out.”

E-commerce sales rose modestly, Aaron said, without adding specifics. That channel now represents 6 percent of worldwide sales.

This conference call marked a first—after the presentation, executives fielded queries from analysts, something the company traditionally hasn’t done. Three questioners expressed thanks for that.

“We thought it might be helpful for analysts, especially in these turbulent and uncertain times,” Aaron tells JCK. “The feedback has been good.”

At the end of the call, Aaron indicated the question period will be an annual, rather than quarterly, event, timed with its year-end results.

JCK News Director