NEW YORK -- Tiffany & Co. topped first quarter profit expectations but fewer tourists at its U.S. stores, particularly from China, dragged on sales and the company trimmed its expectations for the year.
Tiffany said earlier this year that holiday sales were hurt by a drop in spending by Chinese tourists, and that trend accelerated in the first three months of the fiscal year.
The strong dollar has made jewelry from Tiffany even more expensive for Chinese tourists. CEO Alessandro Bogliolo said the brand wasn't experiencing any "negative sentiment" from Chinese shoppers here or in China amid an escalating trade fight.
Revenue slid 3% to $1 billion, just shy of Wall Street expectations, according to a survey by Zacks Investment Research.
The company posted a profit of $125.2 million, or $1.03 per share, which is 2 cents better than Wall Street had expected,
Sales at established stores worldwide declined 5%; on a constant-exchange-rate basis, net sales were equal to the prior year and comparable sales declined 2%.
"Our first quarter results reflect significant foreign exchange headwinds and dramatically lower worldwide spending attributed to foreign tourists," Bogliolo said in a prepared statement.
In the Americas, total net sales declined 4%, and comparable sales declined 5%; on a constant-exchange-rate basis, both total net sales and comparable sales declined 4%.
In Asia-Pacific, total net sales declined 1% and comparable sales declined 5% due to the effect of foreign currency translation; on a constant-exchange-rate basis, total sales rose 3% and comparable sales were equal to the prior year. There was continued strong growth in mainland China, but mixed results in other markets.
In Japan, total net sales declined 4% and comparable sales declined 4%; on a constant-exchange-rate basis, total sales and comparable sales were equal to the prior year. In Europe, total net sales declined 4% and comparable sales declined 7%; on a constant-exchange-rate basis, total sales and comparable sales rose 4% and 1%, respectively.
Per-share net earnings should increase by a low-to-mid-single-digit percentage, the company said Tuesday, citing increased tariffs on jewelry it exports to China. It had earlier projected a mid-single digit percentage increase.
In an interview with The Associated Press on Tuesday, Bogliolo said that the company doesn't plan to increase prices on its jewelry in China amid higher tariffs and said it will absorb the costs. "We don't want to penalize" Chinese customers, he added.
Investors overlooked the decline in sales after the company said it would hike its quarterly dividend by 5%. Shares rose nearly 4% in afternoon trading.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on TIF at https://www.zacks.com/ap/TIF