Tiffany Encouraged by 3Q Momentum

Oct 15, 2020 9:26 AM By Rapaport News

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RAPAPORT... Tiffany & Co. has witnessed a rebound in its operations during the third fiscal quarter, driven by growth in e-commerce sales and a strong recovery in China, the jeweler said Thursday.

Operating earnings grew 25% year on year during August and September, although group sales declined slightly, the New York-based jeweler reported in an unscheduled update for the period.

“While we still expect full-year results to be substantially impacted by Covid-19, we are very pleased with the way the business has rebounded following the first quarter and continues to rebound in the third quarter, especially in mainland China, and to recover in the United States,” CEO Alessandro Bogliolo said. Positive sales trends are continuing in October, the company added.

Global e-commerce sales nearly doubled during the two-month period, while China remained “extremely strong,” it continued. Meanwhile, Tiffany’s sales in the US fell by a low-double-digit percentage, representing a sequential improvement since May, amid a dramatic decline in tourism this year, Tiffany explained.

Tiffany expects fourth-quarter global sales to decline by a mid-single-digit percentage but a similar percentage increase in operating earnings. The company is due to report full third-quarter earnings in late November.

The New York-based jeweler is embroiled in a legal battle with LVMH over the French luxury group’s cancellation of their $16 billion acquisition deal. LVMH accused Tiffany of mismanagement during the Covid-19 pandemic, and plans to argue to the court that this constituted a “material adverse effect” enabling the buyer to renege on the deal.

Tiffany reportedly filed a response to LVMH’s claims this week, countering that “a pandemic carve-out never came up in the negotiations,” Forbes cited from Tiffany documents. “LVMH’s case is doomed, and LVMH knows it,” it added ahead of the trial set for early January.

LVMH is scheduled to report its third-quarter revenue performance after the close of business in Paris on Thursday.

Image: Tiffany & Co. store at One Peking Road, Hong Kong. (Tiffany & Co.)

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