Tiffany’s US Sales Soft in Q1

New York--Tiffany & Co. reported Wednesday that while U.S. sales varied by location in the first quarter, they were “generally soft” with both foreign tourists and local customers spending less.

In the first quarter ended April 30, the New York-based retailer recorded a 4 percent decline in same-store sales in the Americas, with net sales down 3 percent to $392 million.

The retailer did not say anything specific about the first quarter performance of its flagship store in New York after reporting a difficult fourth quarter for the location in the wake of increased security at its neighbor, Trump Tower.

Worldwide, comps sank 3 percent while net sales grew 1 percent to $900 million on the back of growth in wholesale diamond sales and in the Asia-Pacific market, Tiffany’s second largest market. Much of that growth was concentrated in mainland China.

On a constant-exchange-rate basis, same-store sales were down 2 percent while net sales rose 2 percent.

Sales of fashion jewelry--particularly gold pieces in the Tiffany “T” collection--were strong while engagement rings underperformed and high jewelry sales were mixed.

During the company’s earnings call on Wednesday morning, Chief Financial Officer Mark Erceg said the retailer is not focused on “macroeconomic factors we cannot directly influence” but, rather, a set of strategies, which also were outlined by interim CEO Michael Kowalski during the call.

They are: clienteling and CRM (customer relations management) to more effectively engage with customers; adding more new products at a faster pace; optimizing the store network through openings, renovations and, in some cases, store closings; and enhancing brand awareness through effective marketing.

Tiffany’s net earnings in the first quarter totaled $92.9 million, compared with $87.5 million in the same period last year.

Gross margin rose from 61.2 percent to 62 percent due to sales of higher-margin fashion jewelry, partly offset by increased wholesale sales of diamonds.

Tiffany did not open any company-operated stores in the first quarter but closed three.

As of April 30, Tiffany had 310 stores worldwide, including 124 in the Americas. A year ago, the retailer had 308 stores, including 124 in the Americas.

The company completed the renovation of its store on San Francisco’s Union Square in the first quarter and reopened its newly renovated store on Burrard Street in Vancouver.

Tiffany’s guidance for the full fiscal year remains unchanged; the retailer expects a low single-digit increase in sales.

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