Marriage is out of favour. Why is Tiffany selling more rings?
New CEO is looking to revive the brand. His strategy: edgier marketing
The U.S. marriage rate is stuck at historic lows, but sales of engagement rings at Tiffany & Co. have jumped 11% this year, snapping three years of declines.
The reversal has little to do with new products or prices. Instead, the 181-year-old jeweller has changed the way it talks to customers, with advertisements that feature more minorities and same-sex couples. It’s a big departure from the Tiffany ads of yore, with model-perfect Caucasians in poses of marital bliss.
“We had played it a bit too conservatively,” said Alessandro Bogliolo, a retail industry veteran who took over as Tiffany’s chief executive in October. “You have to take some risks and evolve the brand.”
According to the U.S. Census Bureau, 48% of American households are married, down from 78% in 1950. That has been a challenge for a business that gets a quarter of its sales from engagement rings and wedding bands.
So far, the new CEO’s efforts to breath life into the brand seem to be working. Tiffany’s comparable sales from e-commerce and stores open at least 12 months rose in the most recent holiday period, the first quarterly gain since October 2014. They picked up steam in the quarter ended April 30, gaining 10%, while net income jumped 53% to $142 million. The strong results have pushed Tiffany’s stock to alltime highs, although Mr. Bogliolo warned that profit is unlikely to grow as fast for the remainder of the year, as the company invests in technology, marketing and store displays. Shares are currently changing hands above $136, up from about $90 a year ago. The turnaround comes as high-end jewelry sales are surging. The category was among the fastest-growing in the luxu- ry industry last year, according to Bain & Co. And the pace is continuing this year, with LVMH Moët Hennessy Louis Vuitton SE and Compagnie Financière Richemont SA reporting double-digit growth in their watch and jewelry businesses.
Tiffany is getting an added boost from its marketing overhaul, analysts say.
“They are reaching different people,” said Paul Lejuez, a Citi managing director.
“That is a big difference from the Tiffany of old. It’s no longer the stereotypical beautiful couple.”
To mark the launch in May of the first jewelry collection by new creative chief Reed Krakoff, Tiffany painted its signature blue on everything from corner bodegas and taxis to its Fifth Avenue flagship. In digital ads, a blue-clad Elle Fanning dances to rapper A$AP Ferg’s remix of the song “Moon River,” which Audrey Hepburn sang in the 1961 movie “Breakfast at Tiffany’s.”
Some consumers aren’t sure what to make of the new, edgier Tiffany.
“Their latest campaign is shocking,” said Ina Mamaliga, a 27-year-old freelance copywriter in New York. “It’s really cool, but it’s not their style. Before, they didn’t need to show off so much.” Ms. Mamaliga said she used to shop at Tiffany, but hasn’t bought anything there recently.
Mr. Bogliolo, a former Bulgari executive who was most re- cently CEO of clothing company Diesel SpA, said he is modernizing rather than upending Tiffany’s image.
Unlike its European rivals, which thrive on exclusivity, Tiffany “has always been a place where everybody is welcome,” he said. Offerings range from one-of-a-kind, jewel-encrusted necklaces to $150 silver earrings.
The Italian-born CEO, who was dressed in a grey suit and a black, tieless shirt in a recent interview, said he doesn’t like the word “luxury,” because it denotes an expensive formality. “That is the old conception of luxury,” he said.
To a certain extent, he is riding on the coattails of his predecessor, Frederic Cumenal, who had hired Mr. Krakoff, the designer who helped turn Coach into a retail juggernaut; recruited Lady Gaga to star in a series of ads; and tested some same-sex marriage marketing before he was ousted last year.
At the time, Tiffany said it was disappointed with its financial results and needed to move faster.
Mr. Cumenal said he is gratified that strategies set in motion under his tenure are working.
Playing a role in the CEO change was Jana Partners LLC. The activist investor built up a 4.9% stake in Tiffany last year and reached a deal with the company to add three new directors to its board. Jana has since reduced its stake to about 2.86%, according to the latest filings. “You have a CEO who brings out the best in people,” said Scott Ostfeld, a Jana partner. “That is a huge plus.” Erwan Rambourg, an HSBC managing director, said Mr. Bogliolo is encouraging executives to take risks. “Before they were walking on eggshells, afraid to try things,” he said.
One of the new CEO’s first tasks was making greater use of Tiffany’s signature blue. “The colour has been one of the areas where the company has been a bit conservative to the point that we underused it,” Mr. Bogliolo said.
When Tiffany introduced a new fragrance last fall, Mr. Bogliolo and his team debated whether to package it in a robin’s-egg blue box.
This would be the first Tiffany fragrance to be sold outside the company’s 314 stores. The concern was whether all those blue boxes sitting on 7,000 store shelves would oversaturate the brand.
Mr. Bogliolo said he went with the blue to help the fragrance stand out.
“That was a big decision,” he said, “but it was the right decision.”