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Tiffany Sees ‘Robust Recovery’ in China

Jun 9, 2020 10:27 AM   By Rapaport News
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RAPAPORT... Tiffany & Co. reported a strong rebound in its operations in mainland China during April and May, after Covid-19 lockdowns resulted in heavy first-quarter losses for the jeweler.

“While sales in key markets like the US and Japan were down significantly during the first quarter, our business performance in mainland China, which was the first market impacted by the virus, is indicative that a robust recovery is underway,” CEO Alessandro Bogliolo said in the company’s earnings announcement for the first quarter ending April 30.

Retail sales in China jumped 30% year on year in April and surged 90% in May, contrasting with weak figures for the previous two months, the company said. Sales plummeted 85% in February and fell 15% in March.

China was the first major center to see a rebound following the pandemic, with stores on the mainland beginning to reopen at the end of February. By April 30, around 85% of Tiffany’s retail stores in the Asia-Pacific region were fully or partially open.

The improvement indicates sales figures for the rest of the fiscal year will be better than during the past five months, Bogliolo noted. The numbers also validate the retailer’s decision to invest significantly in growing its domestic business in mainland China, given the slowdown in Chinese tourism abroad and the increase in local spending, he said.

Group revenue slumped 45% to $555.5 million for the quarter as the coronavirus spread around the world. Sales in the Americas dropped 45% to $225 million as almost all its stores in the region closed from mid-March onward.

In Asia Pacific, sales fell 46% to $174 million due to store shutdowns in mainland China beginning early February and the pandemic’s spread to the rest of the region in March and April. Sales also slid severely in Japan and Europe. Global e-commerce sales rose 23% for the quarter, with US online sales up 14%.

The company recorded a loss of $64.6 million for the quarter, compared with a profit of $125.2 million a year earlier.

“I am confident Tiffany’s best days remain in front of us, because there is evidence that the strategic decisions we took to focus on our mainland China domestic business, global e-commerce, and new product innovation are paying off — even against the backdrop of a global pandemic,” Bogliolo concluded.

Tiffany shares rose 2% in early trading Tuesday.

Image: A Tiffany store in Shenzhen, China. (Coreamyilsa Lim)
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Tags: Alessandro Bogliolo, China, Coronavirus, COVID-19, Jewelry, mainland china, Rapaport News, retail, Tiffany, Tiffany & CO.
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