Business Trends

Posts Tagged ‘Tiffany & Co.’

Less Luster For Tiffany In Jewelry Industry

In Uncategorized on August 28, 2009 at 4:27 pm

tifSales are lackluster for high-end jewelry retailers this year as Tiffany & Co. is declining much faster than the jewelry industry as whole, according to industry research firm IBISWorld. Analysts at the firm expect industry revenue to fall 4.8 percent to $28.26 billion this year, with price competition from big-box retailers, like Walmart, stealing market share sparkle from traditional jewelry retailers.

“Although luxury shoppers represent a small elite portion of the population, they are the primary target market for high-end jewelers,” said George Van Horn, senior analyst with IBISWorld. “Even the wealthy are cutting back on extra discretionary purchases like jewelry and watches.”

Tiffany is expected to generate earnings per share of about $0.34, which will represent a decline of 46 percent from the $0.63 cents per share compared to the same quarter in 2008. Also, revenue for the quarter is expected to be about $600 million, which will be down 17.3 percent from the $732 million for the same time in 2008.

The fourth quarter of 2009 should see a significant revenue boost compared to the tough Christmas trading period of 2008. It is during this period, the fourth quarter, when jewelry stores will begin to realize more solid returns and better operating performance. As a result, profitability is expected to rise from 10.5 percent of revenue in 2009 to 11.2 percent of revenue in 2010, as luxury spending slowly returns.

While some improvement in industry operating conditions is expected in 2010 as the economy improves, IBISWorld industry risk ratings for jewelry retailing will remain at a very high level. Despite some modest improvement in ratings during the past six months, jewelry retailing continues to have the highest risk rating among the 60 different forms of U.S. retailing that IBISWorld monitors.

Over the coming few years, one of the major challenges for the industry will be the entrance of De Beers into the Jewelry Stores Industry. De Beers is planning to stake its ground as a retailer with a long-term plan to open around 150 stores under the De Beers LV joint venture with LVMH Moet Louis Vuitton. IBISWorld estimates that this move by De Beers will further increase the competition and boost the consolidation that has been under way over the past few years.

“The Jewelry Stores industry is on the precipice of a restructure at both retail and wholesale level that forces players to move quickly to ensure long-term viability,” added Van Horn. “Tiffany will continue to be challenged in finding new ways of selling its products without compromising its brand.”


Prospects for the jewelery industry

In Uncategorized on May 28, 2009 at 9:53 pm

High-end jewelry retailers, like Tiffany & Co. and Zales, are declining much faster than the jewerly industry as whole, according to industry research firm IBISWorld.  Although it is definitely a lacklustre year for these companies, Tiffany has a strong management team and therefore will likely perform better than its high-end competitors.

“There are definitely more declines for Tiffany and the jewelry industry ahead, but it’s likely that Tiffany will not perform as badly as Zales, whose yearly losses are nearing $100 million,” explained Toon van Beeck, senior analyst with IBISWorld.  “Tiffany might just turn in a profit this quarter; relatively small, but at least a profit.” 

Both jewelers are performing poorly in this economic environment, with sales and profits slumping dramatically in most recent quarterly fillings.  However, Tiffany’s last quarterly filing (fourth quarter 2008) indicated that the company still managed to make a profit ($31 million), while Zales experienced a net loss (about $23.6 million) for the same three month period.  Operating declines continue for Zales as the company announced a $23.2 million net loss in its latest quarterly filings, released May 27. 

Holding 4.1 percent market share in both jewelry manufacturing and retailing, two high-risk industries, Tiffany is facing difficult conditions in 2009.  Industry growth rates will not be strong until 2011, but there should be a significant boost in the fourth quarter of 2009, compared to the tough Christmas trading period of 2008.