Store closures negatively impact Tiffany's Q1 results

For its first quarter, Tiffany & Co. reported worldwide net sales declined 45 percent to 556 million dollars and comparable sales declined 44 percent; on a constant-exchange-rate basis, while net sales declined by 44 percent as compared to the prior year and comparable sales declined 43 percent. These sales declines, the company said, reflected closures of company retail stores across all of its global markets at various times, due to Covid-19.

Commenting on the results, Alessandro Bogliolo, the company’s Chief Executive Officer, said: “While the first quarter was very challenging with sales and earnings significantly impacted by Covid-19, the impact of which we expect to negatively affect our full-year sales and earnings relative to 2019, 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. On the topic of the merger, we are pleased that there has been additional progress with the antitrust / competition process in the last few weeks.”

Review of Tiffany’s Q1 performance

The company added that net loss for the quarter was 65 million dollars or 53 cents per share, compared to net income of 125 million dollars or 1.03 dollars per diluted share, in the prior year. Excluding certain costs recorded in the period related to the pending acquisition of the company by LVMH, first quarter net loss was 64 million dollars or 53 cents per share.

In the Americas, total net sales declined 45 percent to 225 million dollars, which included a comparable sales decline of 45 percent. On a constant-exchange-rate basis, both total net sales and comparable sales declined 44 percent. In Asia-Pacific, total net sales declined 46 percent to 174 million dollars and comparable sales declined 45 percent. On a constant-exchange-rate basis, total sales decreased 44 percent and comparable sales declined 42 percent as compared to the prior year due to the impact of Covid-19 that caused store closures in Mainland China beginning in February and spread to the rest of the Asia-Pacific markets in March and April. Stores began to re-open in Mainland China at the end of February. As of April 30, 2020, approximately 85 percent of the company’s retail stores in this region were fully or partially open.

In Japan, total net sales declined 40 percent to 86 million dollars and comparable sales declined 41 percent. On a constant-exchange-rate basis, total sales and comparable sales decreased by 41 percent and 42 percent, respectively, as compared to the prior year. As of April 30, 2020, approximately 5 percent of the company’s retail stores in this region were fully or partially open.

In Europe, total net sales declined 40 percent to 61 million dollars, and comparable sales declined 42 percent. On a constant-exchange-rate basis, total sales and comparable sales decreased 38 percent and 40 percent, respectively. As of April 30, 2020, approximately 15 percent of the company’s retail stores in this region were fully or partially open. Other net sales of 9 million dollars were 65 percent below the prior year due to the impact of Covid-19 and lower wholesale sales of diamonds.

Tiffany closed two company-operated stores in the first quarter and relocated two stores and at April 30, 2020, operated 324 stores (123 in the Americas, 90 in Asia-Pacific, 58 in Japan, 48 in Europe, and five in the UAE), versus 321 stores a year ago.

Picture:Facebook/Tiffany