Tiffany’s US holiday sales growth weakens
NEW YORK, USA — Jewelry retailer Tiffany & Co said yesterday that its sales growth weakened in the US as shoppers pulled back on buying pricey baubles during the key holiday season.
The company known for its iconic turquoise box cut its yearly earnings guidance. Its shares fell more than 10 per cent in morning trading.
The affluent have picked up spending since the Great Recession ended in mid-2009, recovering faster than other segments. Tiffany’s results have reflected this, and quarterly results have beat expectations for the past five quarters. But analysts have wondered if this is sustainable, and Tiffany’s holiday sales indicate that it may not be.
“After achieving very strong and better-than-expected sales and earnings growth in the first three quarters of 2011, sales weakened markedly in the United States and Europe during the holiday season, reflecting restrained spending by consumers for fine jewelry,” said Tiffany CEO Michael Kowalski.
Total sales rose seven per cent to US$952 million ($81.6 billion) in November and December, helped by a 19 per cent jump in the Asia-Pacific region and a 13 per cent rise in Japan.
But in the US growth was slower, with total revenue up four per cent to US$503 million and revenue in stores open at least one year up just two per cent. The latter measure is considered a key gauge of a retailer’s performance.
Tiffany did not break out how different categories fared, but one analyst suggested that slowing US sales growth in the US may be due to the middle-class “aspirational” shopper turning elsewhere as Tiffany’s prices remain high.
“The upper middle-income consumer may have found another place to go. They’re not buying US$50,000 engagement rings, but they’re looking for items for US$350 to US$1,000,” said retail analyst Brian Sozzi of NBG Productions. “Those prices are increasingly harder to find at Tiffany, so consumers may be finding them at Macy’s or Bloomingdales.”
At Tiffany, higher sales to tourists in the US were offset by weaker spending by US customers, Kowalski said, and sales at its New York flagship store fell one per cent.
