Tiffany And Co Sees Rise In Holiday Sales On Higher China Spending

Tiffany & Co (NYSE: TIF), on Thursday (December 26) estimated sales growth of 1% to 3% during the holidays, with the biggest contribution coming from China and a recovery in the Americas.

In 2019, holiday sales in Asia-Pacific and the Americas fell by 3% and 1% respectively, and the Chief Executive Officer Alessandro Bogliolo attributed the decline to a slowdown in tourism and softening demand among locals in its home market.

The CEO, Bogliolo on Thursday commented saying, "We continued to see the Chinese Mainland drive our overall sales growth with a strong double-digit increase, offset by the persisting declines in the Hong Kong market and, to a lesser degree, Japan. We are happy to see sales growth in the Americas, a momentum shift in the region," he added.

Tiffany was founded in 1937 and featured in the New York movie "Breakfast at Tiffany's". The brand which was reported to have struggled with growth over the last several years and experienced declines in sales and profits since 2015, had a major revenue turnaround that took place in 2017.

A lot of luxury retailers including Tiffany and Co. depend on the growing middle class in China that has found an appetite for expensive jewelry and handbags, as consumer demand remains subdued in the United States and Europe due to various geopolitical reasons.

The slow growth rate experienced in China, which is mainly due to its prolonged trade war with the United States and a stronger dollar, has impacted sales for Tiffany. Tiffany greatly relies on tourists from the world's second-largest economy for its sales.

The company disclosed that net sales in Asia-Pacific for the interim holiday period ( that is from Nov. 1 to Christmas Eve) rose by about 5%-7%. In the Americas, the company is expecting net sales growth of 2% to 4%. However, the sales in Japan fell by 9% to 11% during the period, and was hurt by the recent increase in the consumption tax.

In the fourth quarter of 2019, it was reported that Moet Hennessy-Louis Vuitton SE (LVMH), the French multinational luxury good conglomerate moved to conclude plans to acquire Tiffany and Co. for $16.2 billion. LVMH reached the deal to buy Tiffany and Co. shares at $135 per share in cash. It was also reported that LVMH  raised its bid to acquire Tiffany at least twice before the finalized price of $135 per share was agreed on. CNBC also reported that LVMH plans to keep the Bulgari and Tiffany separate if the deal materialized and LVMH rivals, including Gucci and Cartier were reportedly increasing their exposure to high-end jewelry.