Tiffany & Co. (NYSE: TIF) announced on Tuesday that it is blaming poor quarterly results on a significant decline of Chinese tourism. The decline is explained by the ongoing trade war between the U.S. and China as well as an announcement on Tuesday by China’s Ministry of Foreign Affairs. The ministry warned Chinese citizens not to travel to the U.S. Beijing also cautioned those already working and traveling in the U.S.
For the first quarter, the Company’s net income fell 12% to USD 125.2 Million, or USD 1.03 per share. According to Refinitiv, this figure at least beat analysts’ expectations of USD 1.02 per share. Tiffany had USD 1.003 Billion in revenue, falling 3% and missing the USD 1.015 Billion forecast by analysts. The Company’s same-store sales missed estimates in every region. In the U.S., same-store sales dropped 5%, compared with the 1.2% that was estimated. The largest comparable sales decline was in Europe, which fell 7%, compared with the expected increase of 1.8%. After dropping in premarket trading, Tiffany’s stock closed up 2.6% on Tuesday. The shares have risen nearly 15% so far this year.
Tiffany is affected by a recent imposition of increased tariff rates on jewelry products that it exports from the U.S. into China. However, the Company has elected not to increase retail prices in China as of this date.
“The tourists in the U.S. represent a low double-digit percentage of our total sales in the U.S. and we have seen a sharp decrease to sales to tourists in the U.S. in the range of 25%. Even sharper for Chinese tourists,” said Alessandro Bogliolo, Chief Executive Officer of Tiffany.