It looks like people like Tiffany & Co’s (TIF) new $1,000 tin cans after all.
The iconic New York jeweler on Wednesday reported much better than expected quarterly sales results, with business fueled by a new line of quirkier products, sending shares up as much as 18% to a new intraday all time high.
Stripping out the impact of currency fluctuations, same-store sales in the first fiscal quarter rose 7%, smashing expectations for 2.6% growth, according to Consensus Metrix. The increase was particularly dramatic in Asia, and in the Americas. Worldwide net sales rose 15% which fueled a 53% increase in net earnings. Standout categories included engagement jewelry, a key category where sales had been sluggish more recently. Europe was the one blemish in the report as tourists there pulled back on spending. The latest results prompted Tiffany to raise its profit forecast for the fiscal year and announce a $1 billion share buyback.
The strong numbers stand in stark contrast to soft results of more recent quarters, including the holiday period. But Tiffany’s CEO of not even one year, Alessandro Bogliolo, has made it his top priority to speed the pace of new products to keep shoppers interested. Bogliolo took the reins in October, a few months after a predecessor was ousted after a short time in the corner seat.
“We are definitely committed to renewing our product offering,” Bogliolo told Wall Street analysts on a conference call. “Newness should flow in every year in every single part of this jewelry ecosystem of Tiffany.” For years, the pace of new product introductions was glacial at Tiffany, feeding an image of the jewelry being static and dull.
But that has clearly begun to change under Chief Artistic Officer Reed Krakoff, the famed former designer at Coach, credited with turning that once-staid handbag brand into a force in fashion. Krakoff, who joined Tiffany in early 2017, has injected a sense of whimsy, such as those tin cans, and a $9,000 “Ball of Yarn” on offer for the holiday season. More recently, Tiffany launched its “Paper Flowers” collection of high end jewelry with a floral motif, its biggest launch in years. Krakoff’s debut collection for Tiffany included platinum bracelets and diamond necklaces with prices ranging from a couple of thousand to $75,000. There is also the more accessible HardWear line that ranges from $150 to $13,500 as Tiffany looks to also cater to its mid-income shoppers.
His initial success is likely a source of relief to investors worried about Tiffany’s reliance for years on the same stalwarts for sales, especially as it guns for younger shoppers. Tiffany has also been pragmatic about its online presence, one it was late to build, by selling its wares on the site of digital retailers Farfetch and Net-à-Porter.
The company has also opened a jewelry design and innovation workshop in Manhattan to speed up the pace of new products. The move, Bogliolo said, is “fostering a startup-like kind of spirit.” Exactly what a 181-year-old jeweler needs to stay in shoppers’ good graces.