Tiffany’s Q1 Comps Drop 9% in a Difficult Quarter

New York--Tiffany & Co. had the difficult first quarter it expected, with sales dropping in almost every region and across all product categories.

In the Americas, same-store sales slid 10 percent (9 percent on a constant-exchange-rate basis) in the first quarter ended April 30, and total sales were down 9 percent (8 percent on a constant-exchange-rate basis) to $403 million.

Sales were down across the United States among both domestic customers and foreign tourists of all nationalities, Tiffany Vice President of Investor Relations Mark Aaron said on the company’s earnings call Wednesday morning.

Worldwide, Tiffany saw its net sales fall 7 percent from $962.4 million to $891.3 million. Same-store sales were down 9 percent. The jeweler saw sales slide in every region except Japan, where local customers drove an 8 percent gain in total sales and comps rose 12 percent.

While gross margin improved, it was not enough to offset the slow sales, and net earnings tumbled from $104.9 million to $87.5 million.

“Overall, these first quarter results generally represented a continuation of the softness in sales trends that we experienced in the latter part of 2015 and were largely what we expected,” Aaron said.

The company’s global same-store sales fell 5 percent in the fourth quarter, while third quarter comps were up only 1 percent.

In the first quarter 2016, sales were down across all product categories, though Aaron noted that bridal and fashion jewelry fared better than the jeweler’s higher-end collections.

Online sales, which accounted for 6 percent of Tiffany’s global sales in 2015, were up slightly. Aaron said the retailer is continuing its “duel focus” on online and brick-and-mortar business in order to build product and brand recognition and improve the customer experience. He also mentioned the launch of Tiffany’s already announced partnership with e-commerce site Net-a-Porter.

Tiffany also is working to a build up its watch business, an area in which the jeweler is particularly ambitious after returning to timepiece selling with the launch of the CT 60 collection last year.

Nicola Andreatta, head of the company’s timepiece unit, told Bloomberg in an interview published this week that Tiffany aims to become one of the top 10 watch brands in the world in the next 10 years.

Tiffany did not open any new stores in the Americas in the first quarter and does not plan to open any for the rest of