Tiffany & Co (TIF) reported an 11% jump increase in comparable sales in the Americas last quarter, helping it mitigate poor sales in Asia, where its business got dinged by protests in Hong Kong.
For all its (successful) efforts to expand internationally in recent years, Tiffany can thank its erstwhile customers for a stellar quarter: wealthy Americans, particularly New Yorkers.
Tiffany’s big sales jump at home was fueled by its consumers not batting an eye at its raised prices, stronger demand for gold jewelry, and generally increased unit sales. What was particularly impressive was how Tiffany customers shrugged off a big stock market drop in October, the level of which typically has an immediate and direct effect impact on luxury spending, as fears of a market correction swirled. (The market has since rebounded and hit new all-time highs.)
At Tiffany’s legendary flagship store on Manhattan’s Fifth Avenue, a location that generates 8% of company sales, sales to locals soared, even as business from foreign tourists was unchanged. U.S. sales were strong across the country, the company said.
But the most encouraging sign was strong demand for fashion jewelry—as opposed to its bridal jewelry, or statement jewelry, which is the really pricey stuff there—a sign its hiring last year of design director Francesca Amfitheatrof, whose pedigree includes Chanel, Fendi, Garrard and Marni, is paying off and bringing Tiffany jewelry, long seen as boring and dowdy, into a new era. Her Tiffany T collection, her first for the retailer, has gotten off to a strong start.
The only stateside blemish in the report was continued softness in Tiffany’s less expensive silver jewelry, which generates about 25% of sales. (It was all the more disappointing, given the strong U.S. sales at Signet Jewelers’ (SIG) Kay chain, a mid-price retailer whose comparable sales rose 7.5% last quarter.)
The strength in the U.S. was a balm for a retailer which has come to rely on Asia for growth. While mainland sales in China did well, the unrest in Hong Kong, still a key market for Tiffany, was painful, contributing to a 3% comparable sales decrease in the region.
“To no one’s surprise, recent protests and demonstrations have led to a decline in visitors coming to Hong Kong, which we believe was the primary factor adversely sales at several of our Hong Kong stores,” Tiffany investor relations head Mark Aaron said on a conference call.
Worldwide, comparable sales rose 4%.