Chinese tourist slowdown hurts jeweller
THERE was something missing at the luxury jeweler Tiffany & Co. in recent months: Chinese tourists.
For the second time in as many months, a big seller of high-end goods noticed that a particularly crucial demographic of its shopping base had made itself sparse, damaging sales and stoking fears of worse to come.
On Wednesday, US shares of Tiffany & Co. plunged 12 per cent after reporting weakerthan-expected sales in its third quarter.
CEO Alessandro Bogliolo said that Chinese tourists have failed to show up and open wallets up with the same vigor that they had in the past.
Last month, the owner of Louis Vuitton noted the same phenomenon of dwindling Chinese tourists.
Shares in that company were hit hard as well.
Tiffany is considered a bellwether for luxury goods, which is why shares of Ralph Lauren and Movado also fell on Wednesday, even as the broader stock market climbed sharply.
Tiffany’s third-quarter revenue rose 4 per cent to just above $1 billion, yet industry analysts were anticipating a bigger boost.
Part of the reason for the surprise was fewer tourists, particularly Chinese tourists, at stores in places such as New York and Hong Kong.
“We don’t see a slowdown of demand by the Chinese. What we see is that Chinese tourists are traveling less,” said Bogliolo.
In fact, Bogliolo said that Tiffany’s business in mainland China remains strong, achieving double digit sales growth throughout the year.
Bogliolo speculated that the deteriorating value of China’s currency is to blame for the drop in Chinese tourists.
The yuan, also known as the renminbi, or “people’s money,” sank to a 10-year low against the dollar at the end of October. It strengthened slightly this month, leading many to believe that Beijing has stepped in to stop its slide. But others see broader issues at play, including a simmering trade war and the potential for a slowing global economy that is squeezing even the wealthy in China.