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Tiffany Targets New Products as Sales Fall

Mar 19, 2017 10:55 AM   By Rapaport News
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RAPAPORT... Tiffany & Co. expects to turn a corner in 2017 by raising the number of new product launches following last year’s poor performance.

The company reported net sales falling 3 percent to $4 billion in the fiscal year that ended January 31, noting a “soft” performance across all jewelry categories. Net earnings declined 4 percent to $446.1 million.

“Despite macroeconomic and geopolitical challenges in the past year that we believe will continue in 2017, we strongly believe that Tiffany’s strategies are sound and that we have meaningful growth opportunities,” said Michael J. Kowalski, Tiffany’s chairman and interim chief executive officer.

The company has struggled with declining sales in the past two years, culminating in the resignation of Frederic Cumenal as CEO last month. The search for his replacement is still under way; meanwhile, management remains focused on executing its strategy to restore growth, Kowalski said.

That strategy largely revolves around increasing the rate of new product initiatives, Kowalski said in a conference call last week, adding that these would be driven by Reed Krakoff, who joined the company as chief artistic officer in January.

Tiffany continues to emphasize its fashion product segment and is also seeing increased success with sales under $500, Kowalski reported during the call. He said there would be “newness” in silver, gold, platinum and diamonds as well, and that luxury accessories and non-jewelry collections were planned for the 2017 holiday season in November.

Tiffany projected that sales would increase by a low-single-digit percentage and net earnings by a mid- to high-single-digit margin in the current fiscal year. The company plans to increase its global retail space by 3 percent, with 11 new store openings, nine relocations and six closings. Half of the new stores will be in the Asia Pacific region, which outperformed other regions last year.

Sales in Asia Pacific were flat at $1 billion, with strong growth in China offsetting weakness in Hong Kong. Sales in Japan grew 12 percent to $604 million thanks to greater spending by locals, whereas Chinese tourist spending slowed. In the Americas, sales fell 5 percent to $1.8 billion following lower spending by U.S. customers and tourists, the company reported, noting that its flagship New York store was down 11 percent from the previous year. European sales, meanwhile, fell 10 percent to $458 million.

Shares in Tiffany rose 2.7 percent on Friday following the earnings announcement, with analysts saying the results were better than expected.
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Tags: diamonds, Fashion jewelry, gold, Jewelry, Rapaport News, Reed Krakoff, silver, Tiffany & CO.
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