Tiffany & Co. (NYSE: TIF) stock price is slightly down in pre-market on news that Tiffany still did not manage to recover from the crisis and most of the stores are still closed.
In a letter to shareholders and employees Tiffany & Co. CEO,Alessandro Bogliolo, said that the best time for TIF is ahead of us.
We are pasting the most interesting parts below:
“While the first quarter was very challenging with sales and earnings significantly impacted by COVID-19, the impact of which we expect to negatively affect our full-year sales and earnings relative to 2019, I am confident Tiffany’s best days remain in front of us because there is evidence that the strategic decisions we took to focus on our Mainland China domestic business, global e-commerce, and new product innovation are paying off – even against the backdrop of a global pandemic. Let me expand, briefly, on each of these elements.
First, while sales in key markets like the United States and Japan were down significantly during the first quarter, our business performance in Mainland China, which was the first market impacted by the virus, is indicative that a robust recovery is underway. Retail sales in Mainland China were down approximately 85% and 15% during the first and second months of the quarter, but up approximately 30% during April, each as compared to the same period in the prior year. Moreover, that sequential strength has continued to accelerate with May retail sales in Mainland China up approximately 90% despite global net sales being down approximately 40% in that month as compared to May 2019. This evidence not only leads us to believe that our global net sales will significantly improve over the balance of the fiscal year relative to our year-to-date performance, but also confirms that our decision to invest heavily in growing our domestic business in Mainland China was particularly prudent and well-timed, given the recent sharp decline in Chinese tourism abroad and the increase in local consumption. We are confident that Tiffany is now well positioned to benefit in the years ahead in this important market.
Second, while first quarter sales were negatively impacted due to numerous store closures resulting from COVID-19, our global e-commerce business has performed well in the quarter due, in part, to last year’s complete re-platforming of the front-end of our e-commerce sites and our decision to stand up a sales-enabled website in Mainland China. First quarter e-commerce sales were up 23% globally with key markets such as the United States and the United Kingdom up 14% and 15%, respectively. Additionally, sales through our Mainland China e-commerce portal have grown sequentially every quarter since the portal was launched last July. Our strong global online sales trend has continued through May, with global e-commerce sales more than doubling those of May 2019, reflecting significant increases across every region, and bringing our global e-commerce sales up to approximately 15% of our total net sales for the fiscal year-to-date May period versus the 6% that global e-commerce sales represented in each of the last three full fiscal years.
Finally, Tiffany T1 – our newly launched collection in rose gold and gold with diamonds – is off to a tremendous start with cumulative sales through the end of May matching our original projections despite a significant number of our stores being closed around the world. Based on our experience with the Tiffany HardWear and Paper Flowers launches, we believe it is likely that year one sales of T1 will eclipse year one sales for these two launches combined and may well exceed the sales of Tiffany T-Color, which was successfully launched last October and since then has been often out-of-stock due to overwhelming demand.
Mr. Bogliolo finished his comments by saying: “For these reasons, and as I stated earlier, 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. On the topic of the merger, we are pleased that there has been additional progress with the antitrust / competition process in the last few weeks; notably, we obtained clearance last week for the transaction from the Federal Antimonopoly Service of Russia and were notified in late May that the Mexican competition authority has declared our filing to be complete.”
Tiffany & Co. (NYSE: TIF) stock lost 1.38% in Pre-market hours and 10% year-to-date.