Tiffany & Co. gained $1.3 billion in terms of sales of its products. However, it was less than 1% compared to the same period previous year.
Other firms like Michael Kors, Wal-Mart and Luluemon have also gained less profit due to the same reason. Even Chanel, another luxury retailer, is affected by the challenges of today’s currency. The company announced that they would raise prices in Europe and cut them in Asia. It seems that people are travelling from Asia to Europe to get the expensive handbags at a catchy price tag and afterwards resell them on the grey market.
However for Tiffany the situation is even more challenging. This is because of its unique customer base. Over half of their sales come from international markets. Therefore, Tiffany counts on its location from to US to sell to wealthy foreign tourists who have found out that the products have just become more expensive.
Stores from the US account for almost 25% of Tiffany’s sales, 24% come from Australia, Korea, China and 13% from Japan. 12% of the sales are accounted for by Europe, the United Arab Emirates and other international markets and finally 4% of the sales come from Russia.
The foreign exchange rates were not the only problem. During the holidays sales in the US were weak.Tiffany has designed products to attract self-purchasing females, but it seems that the company has focused too much on advertising its “T” collection and this might have led to sales drop in other categories.
Although things may not be good at the moment, Tiffany’s executives are expecting a future growth. The president of the company, Frederic Cumenal, has announced that over the coming year the store count will be boosted by 12 to 15.They are also working on a second collection by Francesca Amfitheatrof, whose first collection was released last year and was a great success among customers. The company also plans to launch a new watch. Taking into consideration the vitality which the company has displayed over the past few months, the future may indeed be promising.