Tiffany Sees Glimmer of Hope as Profit Slumps

RAPAPORT... Tiffany & Co. reported a sharp decline in profit in the second fiscal quarter but noted sales have returned to pre-pandemic levels in August."Our global sales trends have strengthened in August, with preliminary month-to-date worldwide sales through August 25 being slightly positive as compared to the same month-to-date period in the prior year," said CEO Alessandro Bogliolo in an earnings statement on Thursday.Group sales fell 29% year on year to $747.1 million for the three months ending July 31 as store closures in the US during the coronavirus pandemic outweighed a recovery in China. Net earnings plummeted 77% to $31.9 million, after the company incurred a loss in the first quarter. Sales in the Americas fell 46% to $247 million as Covid-19 lockdowns forced stores in the region to shut from mid-March through June, Tiffany explained. Asia-Pacific revenue was flat at $299 million as 80% growth in mainland China and additional strength in South Korea offset softness in other markets and a decline in tourist shopping in markets such as Hong Kong and Japan.E-commerce sales surged 123% year on year as the virus limited in-store purchases. The segment accounted for 15% of group sales during the first half of the fiscal year, compared with 6% in each of the last three full fiscal years, Tiffany added. "We were excited to see that the encouraging trends we cited for the first quarter, namely, increased sales in mainland China and global e-commerce, accelerated during the second quarter and propelled our return to quarterly profitability," Bogliolo added. Tiffany confirmed that it had pushed back the deadline to complete LVMH's acquisition of the company to November 24, 2020. LVMH has notified Tiffany that it reserves the right to challenge the validity of the extension, it added. The deal is still subject to regulatory clearance by several authorities, including the European Commission.

Image: Tiffany jewelry boxes and pouch. (Shutterstock)