Tiffany sales to Chinese tourists disappoint, shares fall sharply
Tiffany & Co on Wednesday reported quarterly sales that missed estimates as tourists from the Chinese mainland spent less than expected at the jeweler’s stores in the US and Hong Kong, a shortfall that sent the company’s shares down as much as 13 percent.
Investors were also disappointed by the company’s failure to raise its fullyear profit outlook ahead of the holiday season and by the slower than expected growth of same-store sales.
Tiffany shares fell 11.81 percent to $92.54 at close of trading on Wednesday.
Chief Executive Alessandro Bogliolo tried to reassure investors by pointing out that while spending outside the mainland was down, sales in the mainland were robust.
“We can speculate on the reasons for the drop in tourist spending outside the mainland but the reality is that the Tiffany brand is appealing to Chinese customers as evidenced by the continued strong sales growth in the Chinese mainland in the quarter,” he said.
Some of the increase in demand in the mainland could be attributed to Tiffany lowering prices in the country after the Chinese government cut tariffs on luxury goods, he said.
Bogliolo said Tiffany was shifting more inventory to the mainland, where customers are spending more than they are overseas.
“When it comes to tourism, what we do is try to follow the customers while they spend... We are increasing our inventory in the mainland because demand there has grown,” Bogliolo said.