Customers Appreciate Tiffany’s Cheaper Trendy Jewelry

(Reuters) – Tiffany & Co’s TIF.N better-than-expected quarterly results suggest the luxury retailer’s push towards higher-margin fashion jewelry and affordable products was helping it win back customers.

Shares of the luxury retailer, whose sales also exceeded estimates, hit a 19-month high in afternoon trading on Friday.

Tiffany is struggling to increase sales, especially in the Americas – its biggest market – as buyers spend less on accessories and switch to cheaper, chic brands.

The jeweler dismissed chief executive Frederic Cumenal last month and days later struck a surprise deal with activist investor Jana Partners to add three directors to its board.

Tiffany sold more fashion jewelry in the fourth quarter ended Jan. 31, driven by demand for gold jewelry and items from her “Tiffany T” collection. The company quickly introduced new items in this category.

“The fashion category is where we’ve had the most relative success, so I think that at least directionally speaks of some success in attracting millennials,” the president and CEO said by Tiffany’s interim Michael Kowalski on a conference call.

Sales of jewelry under $ 500 also increased in the quarter. The company plans to increase its offerings in the category and also expects to lift “disappointing” e-commerce sales, Kowalski added.

“We are encouraged by strong fundamental momentum and believe TIF is making good progress,” said Oliver Chen, Cowen & Co analyst, in a client note.

JAPAN, CHINA SALES ON THE RISE

Sales in Japan, which rose 15% to $ 185 million in the fourth quarter, were bolstered by exposure of the Tiffany brand through a popular TV show last year, Kowalski said.

A strong yen also helped boost spending by Japanese tourists in other regions.

Chinese consumers spent more locally than as tourists, Kowalski added, driving sales growth in Asia-Pacific to 9% to $ 284 million.

However, Tiffany’s sales in the Americas fell 3% to $ 587 million in the quarter ended Jan. 31, partially affected by traffic disruptions at its Fifth Avenue flagship store in New York City due to its proximity to the Trump Tower.

Net sales rose 1.3% to $ 1.23 billion, the second consecutive increase in two years.

Excluding items, the company earned $ 1.45 per share.

Analysts on average expected earnings of $ 1.38 per share and revenue of $ 1.22 billion, according to Thomson Reuters I / B / E / S.

Reporting by Jessica Kuruthukulangara and Sruthi Ramakrishnan in Bengaluru; Editing by Martina D’Couto


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