Tiffany & Co Asia-Pacific sales soared 28 per cent in the first three months of this year helping the New York-headquartered jewellery retailer achieve a 53 per cent lift in profit.
The company’s worldwide net sales increased 15 per cent to $1 billion, with comp sales up 10 per cent. Net earnings increased from $93 million to $142 million.
Asia-Pacific sales reached $329 million – one third of Tiffany’s global sales – driven by China “and most other markets,” and higher wholesale sales in Korea. Management attributed the growth to higher spending by both local customers and foreign tourists. On a constant exchange-rate basis, total sales and comparable sales increased 23 per cent.
In Japan, total net sales rose 17 per cent to $151 million and comparable sales rose 14 per cent.
Neil Saunders, MD of GlobalData Retail, says the results showed that despite being up against some soft prior year figures, the group has “pulled itself out of its previous funk” and its various initiatives are delivering solid results.
“Among the steps taken, the renewal of the offer is the most critical. Here, Tiffany’s focus on producing more innovative and contemporary collections has paid dividends in both stimulating consumer interest and driving sales. Collections like Tiffany HardWear have been well received and has enabled a brand that was seen as old to reconnect with younger demographics.”
Saunders says the pace of product innovation was especially encouraging. “New ranges like Paper Flowers show that the company is full of ideas and that it will continue to launch new collections throughout the year. This approach means that the company is once again treating jewellery as an item of fashion and is putting itself at the forefront of trends and modern design. In our view, this is the breath of fresh air that will clear away Tiffany’s traditionally fusty image.
“It is also encouraging that, while cohesive, new collections are accessible to many consumers. The luxury Paper Flowers range, for example, features items that span the price spectrum from $2500 to $75,000. Meanwhile, the more everyday HardWear range spans $150 to $13,500. Certainly, products are not cheap, but neither should they be as Tiffany is an unashamedly luxury brand that wants to create an aspirational feel.”
He says strong marketing has helped to amplify the changes made to products. “In our view, campaigns like Believe in Dreams are wonderfully playful and go right to the heart of the issue: that Tiffany might be seen as old-fashioned, but actually, it has something of relevance to the modern shopper. Featuring Elle Fanning in a Tiffany Blue colored hoodie sets the tone perfectly and really helps connect the brand with younger consumers with whom it has traditionally had little resonance.”
GlobalData’ research shows that Tiffany is gaining ground in both awareness and appeal to millennial shoppers and this is one of the key factors helping performance.
“Notably, this shift in attitude and message has not harmed the appeal or affection older customers have for the brand. Indeed, many are very engaged with the new styles and marketing. Tiffany, it seems, finally realises that most consumers of all ages no longer want old-world luxury; they want modern, fresh thinking that excites and inspires them.”
But he cautions Tiffany still has work to do on its store environments. “Although steps are being taken to address this, many stores still do not reflect the brand image of the new Tiffany. However, we appreciate that this change will take time to deliver and are now confident that Tiffany will address the issues. Away from stores, we applaud the website which is easy, engaging and interesting to shop; this is no doubt helping Tiffany’s e-commerce numbers.
“Overall, we believe that Tiffany has done a great job in turning around its brand. The company feels more energetic and younger than it has for a long time, and that can only be a good thing.”