Reasons For Tiffany&Co'S Disappointing Performance

Recently, the US high-end jewellery brand Tiffany & Co released the sales bulletin from November 2014 to December: poor performance during the holiday sales season. The net sales of the world increased by 3% over the same period of exchange, compared with the same period of the previous year. If the impact on the negative exchange rate was 1%, it was forced to lower the profit forecast for the 2014 fiscal year.

Investors were shocked to take into account the improving economic situation in the US.

There are many objective factors that cause Tiffany downturn.

Japan's macroeconomic and political factors have further worsened sales in the Japanese market.

The strength of the US dollar will not only affect the sales of overseas markets, but also affect the consumption of overseas tourists in the US.

But the most surprising thing is the decline in brand performance in the US market.

"The downturn in the US market is amazing," Dorothy Lakner, an analyst at Topeka Capital Markets in New York, commented.

The economic situation of the whole country is very good, and the stock market has been innovating repeatedly. Japan should create good results in this holiday.

Sales in the US account for 49% of Tiffany's global sales, and the improved economic situation also helps Tiffany improve its performance.

Tiffany has raised prices to increase margins and increase marketing efforts.

These measures helped the company achieve substantial sales growth in the first few quarters.

But this trend has not been extended during the holidays. The total sales volume in the US is 544 million US dollars, which is barely the same as in the same period in 2013, and the same store sales fell 1% year-on-year.

Most luxury companies haven't released sales bulletins during holidays, but the obvious trend is that Americans are more willing to choose discount chains to spend.

According to the news of First Data, the largest wholesale shop and supermarket became the biggest winner during the holidays, and the days of department stores and boutiques were not so easy.

Tiffany most of the existing customers are well-dressed upper middle class.

The financial crisis in 2008 has led to a change in the American consumption concept. Although the economic situation has improved, most Americans seem to have become accustomed to frugal lifestyles.

This will hinder Tiffany from expanding its existing customer base.

The strength of the US dollar against major currencies such as the euro and yen has a negative impact on the sales performance of Tiffany.

According to the constant exchange rate, European sales increased by 9% compared with the same period last year, while Japanese sales decreased by 3% compared with the same period last year. However, after the current exchange rate was converted, European sales grew by only 1% over the same period last year, and the rate of Japanese sales dropped by an astonishing 16% over the same period last year.

Tiffany is not the only company facing exchange rate risk, but Tiffany has 51% of its sales from overseas, which makes the company's risk exposure very large.

Another Apple Corp, a high-profile exchange rate victim, announced last week that it would raise the overseas selling price of its apps to cope with the risk of a stronger US dollar.

For Tiffany, exchange rate risk will also affect the revenue generated by tourism.

With the strength of the US dollar, overseas tourists will not be willing to buy Tiffany in New York flagship store.

Design director Francesca Amfitheatrof released her first Tiffany design series Tiffany T last year.

This is Tiffany's first letter LOGO series jewelry, no gem elements.

The Tiffany T series is designed for women with strong internal strength, changing the traditional way of buying jewelry.

Its target customers are free and independent urban women, not those who buy gifts for wives or girlfriends.

The Tiffany T series is selling well, but it has not brought halo effect to other products.

Oliver Chen, an analyst at Cowen & Co. in New York, pointed out in the report, "

T maintained a strong growth momentum, but it did not pull the sales growth of other jewellery as expected.

For any one

Japan is one of the most important markets for brands.

But the Japanese government has improved.

The tax rate, the macroeconomic recession, the serious aging of the country, and the weak Japanese market.

These effects on Tiffany are particularly serious.

Tiffany has 56 stores in Japan, almost 1/5 of the world's total.

The good news is that other parts of Asia are doing well.

Sales in the Asia Pacific region stood at US $210 million, an increase of 10% over the same period, unchanged from the same exchange rate. The same store sales grew by 6% over the same period last year, mainly due to the strong growth in the Chinese and Singapore markets.

Oliver Chen said, "we are very encouraged by the growth in Asia."