A shopper has a Tiffany & Co bag on Fifth Avenue in New York, May 30, 2019.
Victor J. Blue | Bloomberg | Croissants
The luxurious jeweler Tiffany & Co. owed disappointing quarterly results to a steep decline in Chinese tourism, the company said Tuesday.
Having beaten its full-year outlook to low-to-mid-digit growth from mid-single-digit growth, Tiffany quoted "dramatic" lower tourist spending.
"Tourists in the US represent a low double-digit percentage of our total sales in the United States, and we have seen a sharp decline in sales to tourists in the United States of the order of 25%. Even sharper for Chinese tourists," said Tiffany's Chief Executive Officer Alessandro Bogliolo said at the company's conference call.
Since the beginning of May, the tension between the United States and China has increased, while the world's two largest economies are struggling to pass a trade agreement. A brutal trade agreement with China led President Donald Trump to raise $ 200 billion of Chinese goods and, in retaliation, Beijing rates of $ 60 billion for imports.
China's Foreign Ministry warned Chinese citizens Tuesday to travel to the United States, according to state broadcast CCTV. Beijing warned those who work, study and travel in America.
Mark Erceg, Tiffany's Chief Financial Officer and Executive Vice President, said the company is "influenced by the softness of foreign tourist spending." However, Tiffany is also affected by "the recent introduction of higher tariffs on jewelry products that we export from the United States to China, and our decision not to make our retail price in China reasonable," Erceg said.
For the first quarter, the jewelry manufacturer's net income fell 12% to $ 125.2 million, or $ 1.03 per share. This responded to analysts' expectations of $ 1.02 earnings per share, according to Refinitiv.
Tiffany had $ 1,003 billion in revenue, falling 3% and missing $ 1,015 billion forecast by analysts. The company's sales in the same store missed estimates in all regions. In the US, sales with the same store fell 5% compared to the estimated 1.2%.
The largest comparable decline in sales was in Europe, which fell 7% compared to the expected increase of 1.8%.
After dropping in premarket trading, tiffany stock closed up 2.6% on Tuesday. The shares have risen almost 15% so far this year.
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