Tiffany (TIF) 1Q 2020 posts loss, says LVMH deal winning regulatory OKs

Tiffany & Co. said its jewelry business is rebounding in China after the coronavirus pandemic and its merger with French luxury retailer LVMH is clearing regulatory hurdles.

The U.S. jewelry maker said Tuesday in an earnings release that its same-store sales were down about 44% in the fiscal first quarter as the pandemic shuttered shopping malls and stores across the globe. Yet CEO Alessandro Bogliolo pointed to China as “indicative that a robust recovery is underway.”

Here’s how Tiffany did during its fiscal third quarter ended April 30: 

• Loss per share: 53 cents 
• Revenue: $555.5 million 

Tiffany’s swung to a net loss of $64.6 million, or 53 cents a share, from earnings of $125 million, or $1.03 a share, a year ago. Revenue fell 45% to $555.5 million.

Analysts surveyed by Refinitiv were expecting Tiffany to earn 3 cents a share on sales of $701 million, but the coronavirus pandemic has made comparisons with estimates difficult to make. 

The company has 324 stores around the world. About 70% of the stores were closed as of April 30, when the fiscal first quarter ended.

Tiffany said its jewelry sales dropped off significantly in the three-month period. Engagement jewelry declined by nearly 50%, more than any other category.

The company said its focus on expanding business in China, investing in its websites and adding new jewelry products prior to the pandemic have made the company more resilient.

In China, same-store sales were down about 85% and 15% during the first and second months of the quarter, but have picked up again in April and May. He said sales jumped by 30% during April and about 90% in May, compared to the same period a year prior.

E-commerce sales grew by 23% across the globe. That was fueled by the U.S. and United Kingdom, where sales were up 14% and 15%, respectively.

Tiffany said sales of its new collection in rose gold and gold with diamonds has also been a bright spot. It said sales of the new line have kept up with original projections, even as customers couldn’t go to stores.

LVMH agreed to buy Tiffany in November for $16.2 billion. The coronavirus pandemic, however, threw the deal into doubt. As stores temporarily shuttered and many sales evaporated, LVMH CEO Bernard Arnault looked to lower the price of buying the U.S. jewelry chain, according to people familiar with the matter.

Bogliolo said the merger recently got regulatory approval to move forward with the deal from antitrust officials in Russia and Mexico. Other key regulatory approvals are still pending. 

“I am confident that Tiffany’s best days remain ahead of us and I am excited we will be taking that journey with LVMH by our side,” he said.