US jeweller Tiffany & Co has announced profit will drop for the full 2015 year and reported lower-than-expected sales for the second quarter of the year.
Profit was 86 cents a share, excluding some items, the New York-based company said in a statement published today (August 27th). Analysts had estimated 91 cents on average, according to data compiled by Bloomberg.
Revenue down 0.2 per cent in Q2
Tiffany’s total revenue fell 0.2 per cent to $990.5 million (£642 million) in the quarter ending July 31st, missing the average analyst estimate of $1 billion, according to Thomson Reuters. Excluding currency effects, revenue rose seven per cent, while net income fell 15.4 per cent to $104.9 million, or 81 cents per share.
The company said it expects net earnings to decline two per cent to five per cent for the full year.
It blamed a strong US dollar for the lower-than-expected results, which hit tourist spending in the country and reduced the value of overseas sales.
"The adverse effects from the strong dollar have been even more significant than initially expected," chief executive Frederic Cumenal said in a statement. The company is looking to new designs and products, such as the Tiffany T jewellery and CT60 watch collections, to help fuel demand, he added.
More turbulence ahead
Analysts predict more turbulence ahead for Tiffany in light of China’s economic turmoil. Western brands face a new obstacle to growth in the second largest luxury market in the world after the devaluation of yuan.
The lower Chinese currency means that foreign goods become pricier for Chinese consumers and is also likely to curb Chinese tourism to the United States.
Tiffany's shares dropped in early trading after the results were released to $79. The stock had already tumbled 20 per cent through Wednesday’s close.
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