Tiffany Profit Soars as China Recovers

RAPAPORT... Tiffany & Co. reported a sharp jump in profit in the third fiscal quarter as sales in China surged and consumer spending shifted to higher-margin items.Net earnings rose 52% to $119 million in the three months ending October 31, buoyed also by a lower tax rate, the US jeweler said Tuesday. Group sales fell 1% year on year to $1 billion, a gentler decline than analysts had expected, according to data from Seeking Alpha."The results...demonstrate that our strong continuing execution against the strategic priorities we set three years ago positions us to achieve sustainable sales, margin and earnings growth for this legendary brand," commented Tiffany CEO Alessandro Bogliolo.Sales in the Americas decreased 16% to $354 million due to a drop in tourism, though the performance was better than the company saw in the second quarter, when stores shut across the US. In the Asia-Pacific region, however, revenue grew 30% to $382 million in the third quarter, with sales in mainland China up by more than 70%. Global e-commerce sales skyrocketed 92%.Margins benefited from a shift in the sales mix toward more profitable goods, Tiffany explained. In addition, the average unit retail price - calculated as revenue divided by number of items sold - increased in response to campaigns to focus consumers on the company's "finest products," both online and in stores, the jeweler added."Absolutely noteworthy is the performance of T1, our newest gold and gold-with-diamonds collection, which was received particularly well in all markets and channels," Bogliolo added.Sales in the nine months to October 31 slid 25% year on year to $2.31 billion, while net earnings plunged 75% to $86.3 million.The company maintained its forecast of a sales decline in the mid-single-digit percentages for the fourth fiscal quarter, which includes the US holiday season - set to be the retailer's final one before LVMH acquires the company for $15.8 billion."We look forward to surprising and delighting our consumers during the holiday season and the successful completion of the merger transaction with LVMH in early 2021," Bogliolo said.Image: Tiffany blue box from the campaign's 2020 holiday campaign. (Tiffany & Co.)