A decline in aspirational spending and a shift in sales strategy have hurt Tiffany & Co. in the United States, LVMH chief financial officer Jean-Jacques Guiony said during LVMH’s July 23 earnings call, according to a SeekingAlpha transcript.
“The pressure in there on Tiffany,” Guiony told analysts, ascribing the problem to three factors.
The first, he said, is a general slowdown in aspirational spending in the United States, with customers feeling the pinch of inflation and high interest rates.
Another factor has been lower sales for bridal: “Bridal, particularly in the U.S., is an extremely large part or a disproportionately large part of the portfolio for Tiffany in the U.S. compared to other geographies, and it’s really under pressure. So we get really negative pressure from that.”
Guiony also pointed to LVMH’s efforts to increase the share of “icons” in Tiffany’s portfolio, particularly collections like the T, Lock, Knot, and HardWear.
“Our strategy is, down the road we should have 90% of the business done with icons,” said Guiony. “It’s getting there very progressively, but it’s doing that at the expense of the rest of the portfolio, where we don’t invest a lot and therefore we have also a negative pressure.”
Reorienting the retailer will “take time and a little bit of money,” he admitted.
On an earnings call last summer, Guiony announced that LVMH planned to remodel all 300-plus Tiffany stores. Yesterday he said that one-quarter of the stores have now been renovated, and LVMH intends to continue that program.
“Our strategy is to elevate the brand from an image viewpoint,” he said. “We are embarking on a journey which is to increase progressively the average price of what we sell, not just by raising prices but by selling more expensive items.”
The comments come as LVMH reported that revenue from its watch and jewelry division dipped 3% in the first half of the year, and 5% on a constant currency basis. Profits from recurring operations fell 19%.
LVMH acquired Tiffany in 2021.
(Photo courtesy of Tiffany & Co.)
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