Aided by a massive sales boost in Mainland China, luxury jewelry retailer Tiffany & Co returned to profitability in the second quarter of this year.
“Retail sales in Mainland China began to rebound in April and continued to accelerate in the month of May, during which retail sales increased approximately 90 percent as compared to the same period in the prior year,” said CEO Alessandro Bogliolo.
“This robust recovery continued throughout the balance of the second quarter with retail sales up approximately 80 percent for the full quarter as compared to the same period in the prior year.”
Tiffany’s second-quarter, worldwide net sales declined 29 percent from the prior year to $747 million and comparable sales declined 24 percent from the prior year. Net earnings of $32 million were down by 77 percent against the previous year’s $136 million. But that marked a welcome return to profit after a torrid, Covid-19 hit first quarter.
For the half-year to July 31, worldwide net sales declined 37 percent year on year to $1.3 billion and comparable sales declined 34 percent. The company reported a net loss of $33 million compared with net earnings of $262 million the prior year.
In the Asia-Pacific region, total net sales were flat in the second quarter and decreased 24 percent in the first half, to $299 million and $473 million, respectively, which included a comparable sales increase of 17 percent in the second quarter and a decrease of 16 percent in the first half.
Besides the stellar China performance, Tiffany said its sales in South Korea rebounded strongly, however these increases were offset by softness across other markets and a decline in wholesale travel-retail sales, all related to the Covid-19 outbreak.
In Japan, Tiffany’s net sales decreased by 28 percent in the second quarter and 34 percent in the first half to $111 million and $197 million, respectively.
Bogliolo said the company’s global sales strengthened in August, with preliminary month-to-date worldwide sales through to August 25 “slightly positive” compared to the same month-to-date in the prior year.
“Our focus on effective local market messaging continued with a marketing campaign, featuring the new Tiffany T ambassador Chinese singer Jackson Yee, which generated impressive levels of social media fan growth and consumer engagement that well exceeded our expectations.”
Meanwhile, the company’s total e-commerce revenue was up 123 percent during the second quarter, accounting for 15 percent of overall sales – significantly higher than the 6-per-cent rate of the preceding three fiscal years.
Bogliolo is bullish about the jeweler’s future prospects, despite the Covid-19 crisis. “I firmly believe that Tiffany’s best days remain in front of us because of the team’s demonstrated agility in response to unforeseen hurdles and our stated strategies, which continue to prove sound.
“Our second-quarter results and August trends to date, in light of these challenging times, confirm the power and resilience of this venerable brand.”