In Trends

Tiffany & Co. reports financial results

Tiffany & Co

Tiffany & Co. reported its financial results for the second quarter and first half ended 31st July, 2020. The company returned to profitability during the second quarter of 2020 behind meaningful sequential improvements in monthly worldwide net sales from May to July.

SEE ALSO : LVMH CEO Bernard Arnault is exploring ways to reopen negotiations with Tiffany & Co.

Worldwide net sales for the quarter were 29% below the second quarter of the prior year, after having been down 45% during the first quarter ended 30th April, 2020 as compared to the prior year, on an as reported basis, with a similar improvement on a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars. Worldwide net sales in the first half were 37% below the first half of the prior year. These declines, a result of the continuing negative global impact of COVID-19 into the second quarter of 2020, resulted in a net loss for the first half.

Alessandro Bogliolo, Chief Executive Officer, said, “We were excited to see that the encouraging trends we cited for the first quarter, namely, increased sales in Mainland China and global e-commerce, accelerated during the second quarter and propelled our return to quarterly profitability. Importantly, our global sales trends have strengthened in August, with preliminary month-to-date worldwide sales through 25th August being slightly positive as compared to the same month-to-date period in the prior year.”

Mark Erceg, Chief Financial Officer, added, “Tiffany’s balance sheet remains strong with an investment grade rating and ample cash on-hand. In fact, because of the measured actions we have taken to reduce costs and manage our CAPEX spending, we were able to maintain approximately the same cash balance, at over $1.0 billion, from the end of the first quarter to the end of the second, while ensuring that we are in compliance with our leverage ratio financial maintenance covenant as well as our fixed charge coverage ratio test for debt incurrence at the end of the second quarter. We currently anticipate our sales for the quarter ending 31st January, 2021 to reflect a mid single-digit decline as compared to the same quarter for fiscal 2019, while fourth quarter 2020 EPS is expected to show a high single-digit improvement on an as reported basis and a low single-digit improvement on a non-GAAP basis as compared to the same quarter for fiscal 2019.”

In the second quarter, worldwide net sales declined 29% from the prior year to $747 million and comparable sales declined 24% from the prior year; on a constant exchange-rate basis, worldwide net sales declined 28% from the prior year and comparable sales declined 23% from the prior year.

Net earnings of $32 million were 77% lower than the prior year’s $136 million, and net earnings per diluted share were $0.26 versus $1.12 in the prior year. Excluding certain costs recorded in the period related to the pending acquisition of the company by LVMH Moët Hennessy – Louis Vuitton SE, pursuant to the Agreement and Plan of Merger, dated as of 24th November, 2019 by and among the company, LVMH, Breakfast Holdings Acquisition Corp. and Breakfast Acquisition Corp., second quarter net earnings were $39 million, or $0.32 per diluted share.

In the first half, worldwide net sales declined 37% from the prior year to $1.3 billion and comparable sales declined 34%; on a constant-exchange-rate basis, net sales declined 36% from the prior year and comparable sales declined 33%.

Net loss was $33 million as compared to net earnings of $262 million in the prior year, and net loss per share was $0.27 versus net earnings per diluted share of $2.15 in the prior year. Excluding certain costs recorded in the period related to the Merger, as well as certain other items, first half net loss was $25 million, or $0.21 per share.

In the Americas, total net sales decreased 46% in the second quarter and 45% in the first half, to $247 million and $472 million, respectively; comparable sales decreased 44% in both the second quarter and first half. In both periods, sales decreased across the region, which management attributed to the effects of COVID-19 and the resulting store closures across the region that began in mid-March 2020 and continued into June. On a constant-exchange-rate basis, total sales declined 45% in both the second quarter and first half, while comparable sales decreased 44% in both periods.

In Asia-Pacific, total net sales were flat in the second quarter and decreased 24% in the first half, to $299 million and $473 million, respectively, which included a comparable sales increase of 17% in the second quarter and a decrease of 16% in the first half. In the second quarter, total sales results reflected strong retail sales growth in Mainland China and Korea, largely offset by softness across other markets and a decline in wholesale travel retail sales. In the first half, total sales results reflected strong retail sales growth in Mainland China and Korea, which was more than offset by softness across the other markets in the region, which management attributed to the effects of COVID-19 and the resulting store closures across the region beginning with Mainland China in February 2020 and persisting for varying durations through early June, as well as a significant decline in wholesale travel retail sales. On a constant-exchange-rate basis, total sales increased 2% in the second quarter and decreased 22% in the first half, while comparable sales increased 19% and decreased 13%, respectively, in those periods.

In Japan, total net sales decreased 28% in the second quarter and 34% in the first half to $111 million and $197 million, respectively; comparable sales decreased 27% and 34%, respectively. Management attributed the decreases in both periods to the effects of COVID-19, including the resulting store closures across the region, which primarily began in early April 2020 and continued through early June, and the decline in tourist traffic beginning early in the first quarter of fiscal 2020. On a constant-exchange-rate basis, total sales decreased 29% in the second quarter and 35% in the first half, while comparable sales decreased 28% and 35%, respectively, in those periods.

In Europe, total net sales declined 28% in the second quarter and 34% in the first half, to $84 million and $145 million respectively, and comparable sales declined 27% and 34%, respectively. Sales decreased across the region, which management attributed to the effects of COVID-19 and the resulting store closures across the region, which began in mid-March 2020 and continued into June, with the vast majority of these stores reopened by mid-June. On a constant-exchange-rate basis, total sales decreased 27% in the second quarter and 32% in the first half; comparable sales declined 26% and 33%, respectively, in those periods.

Other net sales declined 73% in the second quarter and 68% in the first half to $7 million and $16 million, respectively in those periods. The decrease in the both periods was due to decreases in sales within the Emerging Markets region and in wholesale sales of diamonds.

SEE ALSO : The Estée Lauder Companies announces financial results

Tiffany opened one company-operated store and closed five others in the first half. At 31st July, 2020, the company operated 322 stores (123 in the Americas, 88 in Asia-Pacific, 59 in Japan, 47 in Europe, and five in the UAE).

Follow Retail in Asia on Facebook, Twitter and LinkedIn.

Get our top stories delivered to your inbox:

 

Stay ahead
Subscribe for free!
Register now
Stay ahead