Tiffany Cuts Jobs as Sales Lose Sparkle
Upscale jeweler Tiffany & Co. reported a sharp decline in holiday season sales and cut jobs as it struggles with weak spending by tourists in its showpiece stores in the United States.
The company's traditional reluctance to offer promotions has been turning away thrifty customers and a stronger dollar has made purchases more expensive for tourists.
Tiffany's shares were down 4 percent at $64.91 in heavy premarket trading on Tuesday.
"We believe overall sales results were negatively affected by restrained consumer spending tied to challenging and uncertain global economic conditions," Chief Executive Frederic Cumenal said on Tuesday.
Tiffany, founded in 1837, has been spending heavily on designing and marketing contemporary gold and silver jewelry to appeal to a younger, more style-conscious consumer.
Stripping off the impact of the dollar, sales still fell in the holiday season, suggesting that the company's efforts were not bearing fruit.
Tiffany reported a 6 percent drop in holiday season sales to $961 million. On a constant currency basis, sales fell 3 percent.
The company said it now expects earnings to decline by 10 percent for the year ending Jan. 31 vs. its previous forecast of a decline of 5 to 10 percent.
The forecast excludes a charge of about 4 cents per share in the fourth quarter for "staff and occupancy reductions," the company said in a statement.
Tiffany, which is scheduled to report fourth-quarter results on March 18, did not give details on the size of the job cuts.
The company has also been hit as jewelry loses its popularity as a holiday gifting item.
"Prior to the economic downturn of 2008 the period between Thanksgiving and Christmas was key for jewelry buying. Jewelry is no longer at the top of the Christmas list," Neil Saunders, chief executive of research firm Conlumino, said.
Comparable sales in the Americas fell 8 percent on a constant currency basis in the holiday shopping period ending Dec. 31, hit by lower foreign tourist spending in New York, where the company's flagship store is located, and other U.S. markets.
The dollar had risen 9.3 percent in 2015 against a basket of major currencies.
Tiffany, which gets more than half of its sales from outside the Americas, said it expected "minimal growth" in sales and earnings for 2016, as the dollar is expected to continue to pressure sales and discourage tourist spending in 2016.
(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Ted Kerr and Saumyadeb Chakrabarty)