Weak U.S. Demand Weighs on Tiffany -- WSJ
December 06 2019 - 3:02AM
Dow Jones News
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
(END) Dow Jones Newswires
December 06, 2019 02:47 ET (07:47 GMT)
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