Tiffany & Co reported its biggest drop in quarterly sales since the peak of the global financial crisis as a strong dollar discouraged tourists from buying its high-end jewelry and eroded revenue from markets outside the United States.
Shares of the company, whose “Blue Book” collection pieces were worn by actress Cate Blanchett on the Oscar red carpet this year, fell as much as 3% in morning trading on Wednesday.
In the Americas region, Tiffany’s sales at stores open more than a year plunged 10% in the first quarter. Analysts on average had expected a 9.1% decline, according to research firm Consensus Metrix.
“Decline in customer share is evident among most shopper segments, including more affluent households,” research firm Conlumino’s Chief Executive Neil Saunders said.
“It is especially pronounced among affluent younger shoppers where the brand is seen as representing ‘old world luxury’.”
Tiffany, which opened its first store on Sept. 14, 1837 in New York and earned a total of $4.98 on the first day, got nearly half of its $4.10 billion sales last year from the Americas region.
Chief Executive Frederic Cumenal said the company also faced pressure from lower foreign tourist spending in Europe and Asia, particularly in Hong Kong.
“We continue to assume that results in Hong Kong will be pressured throughout the year,” said Mark Aaron, vice president of investor relations.
Tiffany has said that it is being hurt by a decline in Chinese tourists to Hong Kong, an important market.
Same-store sales in the Asia Pacific region, its second biggest market, slumped 15%. Japan was the only bright spot in the quarter, with same-store sales rising 12%.
Tiffany forecast a mid-single digit percentage fall in its full-year profit. The company had earlier said it expected earnings to stay flat or fall by up to mid-single digit in percentage terms.
Net income declined 16.6% to $87.5 million, or 69 cents per share, in the quarter ended April 30. Tiffany expects current-quarter profit to also “decline by a similar rate.”
Net sales dropped 7.4% to $891.3 million – the biggest fall since mid-2009 – missing the average analyst estimate of $915.1 million, according to Thomson Reuters I/B/E/S.
Tiffany’s shares were down 1%at $63.23. Up to Tuesday’s close, the stock had lost more than a quarter of its value in the past 12 months.