Tiffany's stock loses sparkle as sales to China tourists slow
Tiffany shares skidded lower on Wednesday after the luxury retailer reported disappointing third-quarter sales ahead of the crucial holiday spending season.
The company reported $1 billion in revenue, with same-store sales weaker than expected in Europe and Japan. Tiffany pegged the less-than-hoped for sales on "lower-than-expected spending in the third quarter attributed to Chinese tourists in the U.S. and Hong Kong and lower wholesale travel-retail sales in Korea."
Slower economic growth in China is a concern for luxury companies, with Louis Vuitton owner LVMH last month saying it had seen a mild drop in demand among Chinese customers.
The U.S., however, is still a source of optimism for the jewelry seller, which reported a 5 percent rise in same-store sales in America.
"On the sales side, we remain satisfied by Tiffany's growth -- especially within the American market," Neil Saunders, managing director of GlobalData Retailer, said in an email. "Some of this is related to the strength of the economy, with the increased affluence and confidence of middle and higher income consumers helping to boost spending on jewelry."
Saunders also chalked up strength in the U.S. market to Tiffany's work to overhaul its brand to lure a younger audience with marketing and new lines of jewelry and other accessories and products.
Investors were disappointed as well that the company's full-year outlook remained unchanged, with its shares falling Wednesday morning about 10 percent to around $94, after dropping as much as 13 percent ahead of the opening bell.