Weak U.S. Demand Weighs on Tiffany -- WSJ

By Robert Barba and Charity L. Scott

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (December 6, 2019).

Tiffany & Co. reported flat quarterly sales as softness in the U.S. market offset growth in mainland China, highlighting the challenges LVMH Moët Hennessy Louis Vuitton SE faces once it takes over the famed American jeweler.

Tiffany reported $1.01 billion in world-wide net sales in the third quarter, unchanged from a year earlier. Analysts polled by FactSet were expecting $1.04 billion. Accounting for currency fluctuations, net sales rose 1%. The company said Thursday net sales in the Americas declined 4% in the period, citing lower spending by foreign tourists. In mainland China, Tiffany reported more than 10% growth. Late last month, Tiffany agreed to sell itself to LVMH for roughly $16.2 billion. The European luxury conglomerate is betting it can breathe life into a brand that has struggled with weak demand at home and abroad.

"LVMH has bought a solid brand that will nicely complement its existing portfolio," Neil Saunders, managing director of GlobalData Retail, wrote in a research note. "However, it paid full price for a business that still needs a lot of work to reach its potential." He said he doesn't expect the holiday season to be particularly bright for Tiffany either, pointing to data that shows shoppers eschewing jewelry in favor of more practical gifts.

Tiffany said its quarterly profit declined to $78.4 million, or 65 cents a share, from $94.9 million, or 77 cents a share, a year earlier. Analysts were expecting earnings of 87 cents a share.

Also Thursday, Signet Jewelers Ltd. reported better-than-expected results for its fiscal third quarter and boosted its annual guidance, sending shares of the mall-based chain higher. Its stock closed up over 7% at $17.89.

The company, which owns brands such as Kay Jewelers, Zales and Jared, has lost about two-thirds of its market value over the past 12 months. Last year it said it would close more than 200 stores and open new ones outside of shopping centers, in a bid to blunt the effects of declining foot traffic at malls.

Signet reported a loss of $43.7 million, compared with a loss of $38.1 million a year ago. Revenue was $1.19 billion, roughly flat from a year earlier. Same-store sales rose 2.1% in the quarter. Analysts expected a 1.5% decline.

The company said it expects its same-store sales to be down 1.7% to 1% in fiscal 2020. It had previously forecast same-store sales to drop 2.5% to 1.5%.

Write to Robert Barba at Robert.Barba@wsj.com

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December 06, 2019 02:47 ET (07:47 GMT)

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