Tiffany & Co. (NYSE: TIF) reported lower-than-expected first-quarter results on Wednesday morning for the period ended April 30, 2016. Both net sales and earnings were blocked by the decrease in buying power due to the global luxury slowdown.
The luxury jewelry maker reported a 7 percent drop in net sales to $891 million in the period, which missed Thomson Reuters consensus estimates of $915.1 million. The company posted a 15 percent decrease in earnings per share to 69 cents, or 64 cents excluding a tax benefit, missed Thomson Reuters consensus estimates of 68 cents.
Worldwide net sales reflected declines in all regions except Japan. Sales at existing stores plunged 15% in Europe, 15% in the Asia-Pacific region and 10% in the Americas. Like other retailers, the decrease in Tiffany`s sales were offset by the strengthening dollar. Tourist spending accounts for an important part for Tiffany`s business. In U.S., visitors are responsible for roughly 25% of sales. The less favorable exchange rates made visitors less inclined to drop cash on pricey jewelry. To reach more customers, Tiffany has began a limited-time partnership with Net-a-Porter fashion website since last month.
Frederic Cumenal, chief executive officer, said, "As expected, this was a difficult quarter in terms of both sales and earnings growth. We faced numerous challenges, including continued pressure from foreign tourist spending in Europe, the U.S. and Asia, particularly in Hong Kong. However, we are continuing to take actions that are intended to strengthen sales growth with local customers in the U.S. and around the world. From a strategic perspective, we believe that our initiatives will enhance our ability to provide our customers with extraordinary products and experiences and ultimately contribute to improved financial results. We remain focused on generating sustainable long-term sales and earnings growth."