High-end retail chain Tiffany just released first-quarter numbers, and they tell a story of a reduced appetite for opulence by foreign visitors ducking into the luxury stores.
The quarterly report shows that worldwide net sales declined 3% to $1 billion, with comparable sales sliding 5%.
Net sales in the Americas declined 4%, and beyond, net sales declined 1% in the Asia-Pacific region, 4% in Japan, and 4% in Europe.
On a lighter note, Tiffany seems to be holding steady with four new stores in the United Arab Emirates, according to the quarterly report, selling significant quantities of wholesale diamonds.
Leaders — including Tiffany CEO Alessandro Bogliolonote — note that these first-quarter numbers show decreased foreign spending, nearly across the board. That includes sales at the company’s high-profile Fifth Avenue shop in New York City, as well as other stores on other continents.
So high-net-worth shoppers vacationing abroad don’t want to buy as much bling — so what?
Bad Omen?
It’s easy to see a warning in Tiffany’s declining sales, where mainland China is one of the last markets to experience the pain.
In the broader market context, markets are jittery due to the ramifications of looming tariff actions. China may be doing better because the effects of those tariff actions are delayed there. In fact, the Chinese seem abundantly confident that they can weather the storm while inflicting massive economic pain on counterparties such as the American farmer.
In that context, falling sales and bearish indicators may have a lot to do with the coming storm revolving around trade tightening. Protectionism is widely cited as one of the biggest factors in recessionary fears emerging in today’s suddenly less-global economy.
And economic wisdom holds that we may enter a recession next year based at least partially on trade tensions.
In other shareholder news, Tiffany will increase its quarterly dividend rate by 5%. That may attract some shareholders who want to stick with these holdings, but others may opt for more utilitarian holdings during a global recession.
How do you trade luxury brands? What’s your take on the current trade war and our economic future? Leave a comment…
