Tiffany Q2 earnings top Street but sales miss amid Hong Kong protests
Tiffany & Co. reported earnings that easily topped analysts’ expectations but its sales fell short amid protests in Hong Kong and a decline in tourist spending in the U.S.
Profit fell to $136.3 million, or $1.12 a share, in the quarter ended July 31, from $144.7 million, or $1.17 a share, in the year-ago period. Analysts had expected earnings of $1.04 a share.
Sales fell to $1.05 billion from $1.08 billion, missing Street estimates of $1.06 billion. Global same-store sales decreased 4%. Same-store U.S. sales fell 4%. Tiffany said it had “strong growth” in mainland China but “softness” in Hong Kong.
On the company’s quarterly conference call with analysts, CEO Alessandro Bogliolo Tiffany lost six selling days during the quarter in Hong Kong because of the protests. Hong Kong is the company’s fourth largest market.
“With the tough comparison to last year’s strong performance in the first half behind us, and in spite of the headwinds of weak demand from foreign tourists, currency exchange rate pressures and continuing business disruptions in Hong Kong, we are actively managing what is in our control and positioning our brand to win,” Bogliolo said in a statement.
In comments, analyst Neil Saunders, managing director, GlobalData Retail, said that one of Tiffany’s biggest forward challenges will be dealing with any slowdown in the domestic market. He noted that domestic demand for the brand slipped modestly in the second quarter, mostly among middle income shoppers who are cutting back more on expensive, unnecessary purchases.
“Our early data suggest that jewelry will not be a winning category over the holiday period, mostly because of rising economic concerns and a prioritization of more practical gifts,” Saunders said.
Tiffany said it still expects earnings rising by a low-to-mid single-digit percentage and revenue up by a low single-digit percentage, with flat comparable-store sales after a 4% drop in comparable-store sales in the second quarter.