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China a charm for Tiffany

Tuesday, Aug 27, 2013 - 01:50

Aug. 27 - Tiffany's growing business in China is helping to offset weakness in the U.S. where consumers are holding back on buying the jeweler's lower-priced products. Bobbi Rebell reports.

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China was the charm for Tiffany. The luxury jewelry retailer's results were better than forecasts- because of strong results there. U.S. sales were flat - and the strength that was seen was mainly because of tourists at their New York City store- and the super wealthy -giving Tiffany more pricing power: Morningstar's Paul Swinand: SOUNDBITE: PAUL SWINAND, RETAIL ANALYST, MORNINGSTAR (ENGLISH) SAYING: "In the quarter we actually saw price increases in high end jewelry stronger than expected but fashion jewelry, lower price points, places where the consumer is more price sensitive actually slowing and offsetting the increases at the high end." That mainstream U.S. consumer that buys the lower priced and highest-profit margin jewelry at Tiffany is a concern. A recent Ipsos/Reuters poll found 35 percent of Americans planned to spend less on jewelry in the 2013 holiday season. But Tiffany still raised its profit forecast for the year- in addition to those higher prices for the more expensive offerings- materials costs have gone down: And they are continuing to expand in emerging markets like China- hoping the Chinese will adapt some American traditions: SOUNDBITE: PAUL SWINAND, RETAIL ANALYST, MORNINGSTAR (ENGLISH) SAYING: "They don't have a tradition of offering a diamond engagement ring like we do but if you look at Japan and the way that they changed their cultural practices to the American cultural practices over the last 20 or 30 years we can guess that China might do the same thing. That would really increase the penetration of diamond engagement gifting in China, which obviously in the long run bodes well for Tiffany." Sales in Asia, excluding Japan, are now about 22 percent of Tiffany's overall revenue- double the 11 percent of five years ago.

China a charm for Tiffany

Tuesday, Aug 27, 2013 - 01:50

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