China underpins sold Tiffany & Co sales increase
Tiffany & Co sales grew 10 per cent worldwide in the third quarter, with China performing strongly.
Management of the luxury American jewellery retailer attributed sales growth to higher spending by local customers in all regions, partly offset by lower spending attributed to foreign tourists, primarily Chinese, in some markets. Worldwide net sales rose 10 per cent to US$3.1 billion, due to increased sales in all regions and product categories.
Tiffany & Co sales in Asia-Pacific rose 4 per cent to $294 million in the third quarter, highlighted by strong sales growth in Mainland China.
CEO Alessandro Bogliolo noted that third-quarter sales attributed to local customers (as opposed to tourists) continued to grow at a strong rate worldwide and were positive in every region, with particularly strong growth in Mainland China.
“Jewellery volumes also increased in the quarter and year to date. This resulted in mid to single digit net sales growth in the quarter and even higher growth year to date, despite lower-than-expected spending in the third quarter attributed to Chinese tourists in the US and Hong Kong and lower wholesale travel-retail sales in Korea.”
The increase in sales was counterbalanced by a drop in operating income of 22.9 per cent over the past year, attributed to higher spending on marketing, and investment in technology and its new digital channel.
Neil Saunders, MD of GlobalData Retail, said his company’s consumer tracking shows that Tiffany’s brand recognition and affinity has increased sharply among consumers aged 35 and under.
“A few years ago, this group was largely apathetic to Tiffany, viewing the brand as old-fashioned and irrelevant to their needs and tastes. In a relatively short space of time, Tiffany has started to shift that perception and demonstrate that it has something fresh to offer to younger consumers.”