Tiffany Q2 sales remained 29% low YoY

 

Tiffany Reports Significant Improvement

in Sales Trajectory and Profitability! 

Tiffany & Co reported its financial results for the three months that is 2Q & 1H ended July 31, 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. 

Worldwide net sales for the quarter were 29% below the second quarter of the prior year, after having been down 45% during the three months ended April 30, 2020 (“first quarter”) 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 (see “Non-GAAP Measures”). 

Worldwide net sales in the first half were 37% below the first half of the prior year. These declines, a result of the continuiquarter, namely, increased sales in Mainland China and global e-commerce, accelerated during the second quarter and ng 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 propelled our return to quarterly profitability. 

Importantly, our global sales trends have strengthened in August; with preliminary month-to-date worldwide sales through August 25th being slightly positive as compared to the same month-to-date period in the prior 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% as compared to the same period in the prior year. This robust recovery continued throughout the balance of the second quarter with retail sales up approximately 80% for the full quarter as compared to the same period in the prior year. 

Our focus on effective local market messaging continued with a marketing campaign, featuring the new Tiffany T ambassador (Jackson Yee), which generated impressive levels of social media fan growth and consumer engagement that well exceeded our expectations. 

Globally, our e-commerce business was up 123% with key markets such as the United States and the United Kingdom up 122% and 93%, respectively, during the second quarter. This puts global e-commerce sales at approximately 15% of our total global net sales for the first half of fiscal 2020 versus 6% in each of the last three full fiscal years. 

Excluding Mainland China, where our e-commerce platform celebrated its one-year anniversary late in the second quarter, our global e-commerce business grew 114% during the second quarter as compared to the same period in the prior year. 

On the new products front, the Tiffany T1 line, our newest gold and gold with diamonds jewelry collection, continued to do very well in the second quarter both in Mainland China and globally and we are excited to be introducing more styles to the collection in the third quarter of fiscal 2020. The success of Tiffany T1 reaffirms our belief that our improved design capabilities, sharpened product strategies and more disciplined execution are being well received by our loyal customers whilst also attracting new customers to the Brand. 

Mr Bogliolo finished his comments by saying: “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. 

 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 January 31, 2021.”