Tiffany doesn’t sparkle with Q1 misses; will open 11 stores

Tiffany & Co. missed Wall Street expectations for profit and revenue in a lackluster start to fiscal 2016, but still plans to open 11 new stores worldwide.



The retailer reported net earnings of $87 million during the first quarter, down 17% from $105 million the same period a year earlier. Lower gross profit and higher selling, general and administrative (SG&A) expenses drove the reduction in profit.



Worldwide net sales declined 7% to $891.3 million, from $962.4 million and same-store sales declined 9%. In the Americas, total sales of $403 million were 9% below the prior year and same-store sales declined 10%.



In the U.S., softness in spending by both consumers and tourists contributed to dropping sales, while lower spending by tourists negatively impacted European sales. A significant decline in Hong Kong drove an overall sales decline in Asia-Pacific, while local customers actually drove a sales increase in Japan.



Looking ahead, during fiscal 2016 Tiffany expects to open 11 stores, relocate 10 stores and close six stores worldwide. The retailer also expects worldwide net sales to decline by a low-single-digit percentage from the prior year.



“As expected, this was a difficult quarter in terms of both sales and earnings growth,” said Frederic Cumenal, CEO Tiffany & Co. “We faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the U.S. and Asia, particularly in Hong Kong. However, we are continuing to take actions that are intended to strengthen sales growth with local customers in the U.S. and around the world. From a strategic perspective, we believe that our initiatives will enhance our ability to provide our customers with extraordinary products and experiences and ultimately contribute to improved financial results. We remain focused on generating sustainable long-term sales and earnings growth.”