Why Tiffany’s Blues May Be Short-Lived

[angelcai]

That signature blue box may be a symbol of the venerable jewelry maker’s mood as its management watches its share prices fall despite the 7% rise in global net sales which was short of expectations. Tiffany’s weakest market was Europe, where sales at stores open at least a year fell 4 per cent from 2010. UGG Classic Cardy
Though the luxury market was quick to rebound after the recession, Pam Danziger, president of Unity Marketing and author of the newly released Putting the Luxe Back in Luxury says, “The little blue box may be losing some of its luster, as affluent consumers shy away from the more conspicuous symbols of affluence. Luxury consumers don’t want to be seen as part of the much maligned “1%” and this manifests as a preference for luxury goods that are individual, but not overtly status oriented.” UGG Bailey Button
It’s a tough break for Tiffany’s especially because Tiffany’s management worked diligently to cover all its bases in the new retail landscape. The company invested aggressively in an Asian expansion in 2010. At the time, a newly affluent Chinese middle class was positioned well to buy into venerated American brands. UGG Bailey Button Triplet
At that time Tiffany’s also made a bold move to grab a piece of the lucrative handbag market when it purchased the Lambertson Truex label out of Chapter 11. The result was a covetable line of leather goods with prices to rival that other aspirational/luxury brand Coach. UGG Classic Mini
Perhaps most surprising was how a company founded in 1837 and steeped in distinction made a series of overtures to court a younger, more aspirational customer. From throwing open the (glass – not stainless steel) doors on more intimate (read less intimidating) stores in California and Seattle in 2008 to embracing an ad hoc virtual community of 20-something style bloggers. Such collaborations for its “What Makes Love True” promotion this past summer, along with pronouncing Kelly Framel of The Glamourai fame as their “eyewear” ambassador, are the company’s attempt to be more inclusive and less snooty. Likewise, Tiffany’s presents an impressive social profile not only on Facebook and Twitter, but on Instagram as well.
All this should have worked like a(n engraved heart) charm on the minds and wallets of both established devotees as well as the next generation of shoppers. However, with austerity as the reigning frame of mind in Europe and overt displays of affluence not in favor Stateside, it may be a while before Tiffany’s reaps the rewards for its dedicated efforts. Stay tuned.
“Restrained spending” was likewise a problem in Europe, where consumers remain skittish as a debt crisis threatens the economy, said Tiffany CEO Michael Kowalski.
Tiffany shares plunged 10.5 percent yesterday as the company cut its full-year earnings forecast to a range of $3.60 to $3.65 a share, down from $3.70 to $3.80.
Indeed, Tiffany had already lowered its profit outlook in late November, citing lackluster demand in the US and abroad — an announcement that surprised investors
Shares of Harry Winston — whose Fifth Avenue shop specializes in baubles with five- and six-digit price tags — tumbled 3.5 percent on Tiffany’s news. Shares of Saks dropped more than 4 percent, despite the luxury chain having already reported brisk holiday sales.
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References: Why Tiffany’s Blues May Be Short-Lived