Tiffany's stock did not have a glamorous day on Nov. 28, as the iconic jewelry store operator sank 9.6 percent.The New York-based jeweller released disappointing third-quarter sales, citing a decline in Chinese tourism to the U.S.
In October, shares in Louis Vuitton's owner were hit hard as well, due to the same phenomenon of dwindling Chinese tourists.
Tiffany's earnings were in line with estimates, but the lower-than-expected revenue of $1.01 billion was an increase of only 3.5 percent from the same quarter in 2017. The company specifically said that sales were hurt by weaker spending from Chinese tourists in the U.S. and Hong Kong.
Fewer Chinese tourists have been heading to the U.S. due to trade tensions. Meanwhile, the exchange rate between the yuan and the dollar has made the trip more expensive as “people’s money” sank to a 10-year low against the greenback at the end of October.
However, the company has seen strong sales in mainland China. Alessandro Bogliolo, Chief Executive Officer, said,
“It is worth noting that in the third quarter our sales attributed to local customers continued to grow at a strong rate worldwide and were positive in every region, with particularly strong growth in mainland China.”
The Bain consultancy in a study prepared for Italy’s Altagamma association of high-end producers,
said that Chinese shoppers will account for 46 percent of global luxury sales of an estimated $412 billion in just six years.That is up from one third of all sales of luxury apparel, accessories and cosmetics last year.
Luxury goods sales in China this year are forecast to be up 18 percent to 23 billion euros.
Tiffany's full year outlook remains unchanged, with the company estimating it will earn $4.65 to $4.80 per share. The company expects to report its sales results for the November-December holiday period on January 18, 2019.
In 1837, Charles Lewis Tiffany founded his company in New York City where his store was soon acclaimed as the palace of jewels for its exceptional gemstones. Since then, Tiffany& Co. has become synonymous with elegance, innovative design, fine craftsmanship and creative excellence.
The company operates 321 stores (124 in the Americas, 89 in Asia-Pacific, 55 in Japan, 48 in Europe, and five in the UAE) and has more than 13,000 employees.