TIF - Tiffany & Co.

NYSE - NYSE Delayed Price. Currency in USD
125.07
-1.29 (-1.02%)
At close: 4:00PM EDT
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Previous Close126.36
Open126.79
Bid115.00 x 800
Ask125.05 x 1100
Day's Range124.87 - 126.88
52 Week Range78.60 - 134.42
Volume2,420,833
Avg. Volume3,148,887
Market Cap15.175B
Beta (5Y Monthly)1.04
PE Ratio (TTM)28.11
EPS (TTM)4.45
Earnings DateJun. 02, 2020 - Jun. 08, 2020
Forward Dividend & Yield2.32 (1.85%)
Ex-Dividend DateJun. 19, 2020
1y Target Est133.92
  • Business Wire

    Tiffany Declares Regular Quarterly Dividend

    The Board of Directors of Tiffany & Co. (NYSE: TIF) has declared a regular quarterly dividend of $0.58 per share of Common Stock. The dividend will be paid on July 10, 2020 to shareholders of record on June 22, 2020. Future dividends are subject to declaration by the directors.

  • Business Wire

    Tiffany to Hold Virtual 2020 Annual Shareholder Meeting

    Tiffany & Co. (NYSE: TIF) (the "Company") announced today that it is changing the format of its 2020 annual meeting of shareholders (the "2020 Annual Meeting") from an in-person meeting to a virtual one due to public health concerns surrounding the outbreak of the novel coronavirus (COVID-19) and to prioritize the health and well-being of its employees, shareholders and other community members. The original date and time of the 2020 Annual Meeting, as well as the matters to be voted on at the 2020 Annual Meeting, remain unchanged.

  • A tsunami of bankruptcies are about to wash away America's retail sector
    Yahoo Finance

    A tsunami of bankruptcies are about to wash away America's retail sector

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  • For Luxury Brands, It’s Too Early to Pop Open the Champagne
    Bloomberg

    For Luxury Brands, It’s Too Early to Pop Open the Champagne

    (Bloomberg Opinion) -- A flagship Hermes International store in Guangzhou reportedly took in $2.7 million on its first day reopening after the coronavirus lockdown, the biggest daily haul for a boutique in China, according to fashion trade bible WWD.The French luxury brand best known for its Kelly and Birkin bags may not be alone in enjoying the phenomenon that has been referred to as “revenge spending.” The term, coined to describe pent-up consumer demand in the 1980s after the poverty and chaos of the Cultural Revolution, is now being applied to splurging by Chinese shoppers as the virus recedes.LVMH, hit by a 17% decline in first-quarter sales excluding currency movements and acquisitions, said late Thursday that Chinese consumers were once again enthusiastically embracing its brands, including Louis Vuitton and Christian Dior. And my Bloomberg News colleagues reported that sales at LVMH stores on the mainland were up 50% year-on-year in the past three weeks.Cosmetics maker L’Oreal SA also pointed to a recovery in the region’s demand for beauty products. Of course, that may be a function of what’s called the “lipstick” index, where when times are tough consumers tend to buy smaller treats rather than more expensive items. But the signs do bode well for demand from Chinese consumers, who could account for 44% of luxury spending this year, according to analysts at Jefferies.Still, none of this may be enough to rescue second-quarter trading, nor the full year.First of all, there’s no guarantee that the rebound will be sustained. What’s more, during normal times the Chinese make the majority of their vanity purchases when they travel abroad. In this new post-coronavirus era, there has been an initial trend toward more domestic spending, and that could accelerate further. But bigger impulse purchases are still more likely to happen when people can finally visit cities such as Paris or Milan. With airplanes still grounded in many places and borders closed, travel is set to be severely constrained for some time, and that will be a drag on industry growth.Meanwhile, stores in Europe and the U.S. remain closed. When they finally reopen, brands will find it very difficult to compensate for fewer Chinese visitors. Massive job losses and all of the other economic hardships brought by lockdowns means they won’t be able to count on local shoppers to make up the difference. Consultants Bain & Co. estimate that global personal luxury goods sales could fall as much as 35% this year, with a mid-point scenario at 22-25%. This would be the worst decline in modern luxury industry history.Despite the inevitable industry downturn this year — one that will possibly stretch into 2021 — LVMH looks to be one of the best-placed luxury groups.With revenue of 52 billion euros ($56 billion) in 2019, more than three times that of its nearest rivals, LVMH has significant scale and a strong stable of brands, led by Louis Vuitton and Dior but also including Fendi and Celine in fashion and the Sephora beauty stores. The 10% decline in fashion and leather goods sales, excluding currency movements and acquisitions, is better than might have been expected. The company run by billionaire Bernard Arnault also has a diverse portfolio, both geographically and in terms of products, which include spirits and beauty lines too. This gives it scope to cut costs, but also, crucially, to invest when competitors may be weakened.There are some worries. For example, the $16 billion acquisition of American diamond-jewelry icon Tiffany & Co. will now be more of a challenge. (LVMH indicated on Thursday that it would still go ahead with the deal.) And it also has exposure to travel retail through major duty-free chain DFS, which may be depressed for some time.So LVMH won’t be immune from the continued disruption to luxury goods sales. But as it demonstrated in the first quarter it should be more than able to hold its own.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Tiffany says Australian regulators seek more time to review LVMH deal
    Reuters

    Tiffany says Australian regulators seek more time to review LVMH deal

    The France-based owner of luxury brands such as Louis Vuitton offered to buy Tiffany for $16.2 billion last November, and the deal is expected to close mid-2020. Tiffany said it still aimed to close the deal by that time, subject to the review by the Australian Foreign Investment Review Board (FIRB). The FIRB is experiencing delays in processing transactions and requested extending the statutory review deadline of April 8 to until Oct. 6, which LVMH has accepted, according to a regulatory filing https://www.sec.gov/ix?doc=/Archives/edgar/data/98246/000156459020015787/tif-8k_20200407.htm.

  • LVMH says will not buy Tiffany shares on open market
    Reuters

    LVMH says will not buy Tiffany shares on open market

    Louis Vuitton owner LVMH said on Monday it would not buy Tiffany shares on the open market, a move that would have potentially enabled it to pursue its agreement to buy the U.S. jeweller at a lower price than the one agreed last year. Bloomberg reported last week that the French luxury goods group was now considering buying shares in Tiffany on the market, following its deal last November to buy the company for $16.2 billion (14 billion pounds), or $135 a share. "Rumours circulated recently indicating that LVMH would consider buying Tiffany shares on the open market," the company said in a statement.

  • Tiffany's (TIF) Q4 Earnings Surpass Estimates, Sales Up Y/Y
    Zacks

    Tiffany's (TIF) Q4 Earnings Surpass Estimates, Sales Up Y/Y

    Tiffany's (TIF) fourth-quarter fiscal 2019 results reflect improved earnings and sales. Sales grow in most regions.

  • Tiffany Engagement Is Already Testing Commitment
    Bloomberg

    Tiffany Engagement Is Already Testing Commitment

    (Bloomberg Opinion) -- A diamond is forever and so, perhaps, is Bernard Arnault’s interest in Tiffany & Co. Investors have been having some doubts that the chairman and founder of LVMH Moet Hennessy Louis Vuitton SA would deliver on his $16 billion takeover of the storied jeweler. But right now, Arnault is behaving like a classic luxury buyer.The bid for Tiffany is a long-term investment. Since the deal was agreed in November, the outbreak of the coronavirus has brought an abrupt end to luxury spending, first in China, and now in Europe and the U.S. Bernstein analyst Luca Solca estimates a decline of 20% in industry sales before currency movements this year, assuming a recovery in the second half, and a fall of 25-30% in the event of a global recession.Tiffany’s stock price is supported by the $135-a-share offer, but touched a year-to-date low of about $111 earlier this week. That large spread suggests an element of uncertainty the deal will actually close.Shareholders in the U.S. group approved the transaction in early February. Even with the collapse of luxury goods demand, financing shouldn’t be an issue. LVMH raised about $10 billion in a bond sale last month. Bernstein estimates net debt could be in the range of between 1.5 times and 2.5 times Ebitda at the end of this year, depending on how long the pandemic lasts. That’s hardly a stretched balance sheet.The question is whether there is any provision in the fine print of the deal agreement that LVMH lawyers could use to walk away — and whether Arnault would even want to if there was. Wriggling off the hook would damage Arnault’s reputation and send a terrible message to investors about the strength of LVMH.The company would also miss out on the long-term potential of Tiffany. Expanding in jewelry is a deeper strategic priority for LVMH. Trophy assets never come cheap, and if LVMH balked, it might struggle to get a second hearing especially if other suitors emerged. That all fits with what Arnault is doing — mulling the purchase of Tiffany shares in the market, below his offer price. This would be a pragmatic way to try to bring down the overall cost of the deal, without trying to renegotiate, or pressing the panic button.Of course, staying the course has some cost too. Tiffany needed some polish even before the luxury and the non-food retail industry shuttered stores in response to the Covid-19 outbreak. Elevating the brand just got even harder. And by sticking with Tiffany, LVMH is tying up financial resources that might otherwise be available to buy other assets. In reality, some of the smaller luxury houses have family shareholders who may be unwilling to sell out in a weak market.The Tiffany deal was never about buying the jeweler’s 2020 earnings. Just as well, for all sides.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Coronavirus takes shine off Tiffany's sales before LVMH takeover
    Reuters

    Coronavirus takes shine off Tiffany's sales before LVMH takeover

    Tiffany, which is being bought by French luxury goods giant LVMH for $16.2 billion (13.7 billion pounds), said the coronavirus epidemic has had a significant effect on its performance so far in 2020. Tiffany did not give a forecast for its current fiscal year, citing the pending acquisition by LVMH. Tiffany shares were up 1.5% at $127.99 in pre-market trading.

  • Tiffany (TIF) Beats Q4 Earnings Estimates
    Zacks

    Tiffany (TIF) Beats Q4 Earnings Estimates

    Tiffany (TIF) delivered earnings and revenue surprises of 4.65% and -0.15%, respectively, for the quarter ended January 2020. Do the numbers hold clues to what lies ahead for the stock?

  • Business Wire

    Tiffany Reports Fourth Quarter and Full Year Results

    Tiffany & Co. (NYSE: TIF; the "Company") today reported its financial results for the three months ("fourth quarter") and 12 months ("full year") ended January 31, 2020. Net sales increased 3% in the fourth quarter and were approximately unchanged in the full year, as compared to the respective prior year periods.

  • Reuters

    Coronavirus sows doubt over corporate acquirers coming through

    Its economic impact now has investors doubting whether many companies which shook on mergers and acquisitions will see them completed. Traders and fund managers say the spread between agreed deal prices and subsequent trading in the stock of the acquisition targets is the widest they have ever come across. "I have been doing this for 25 years, and I have never seen panic like this coming out of merger arbitrage spreads," said Roy Behren, managing member of Westchester Capital Management, which has $4.1 billion in assets under management, most of it invested in merger arbitrage.

  • Tiffany (TIF) Earnings Expected to Grow: What to Know Ahead of Next Week's Release
    Zacks

    Tiffany (TIF) Earnings Expected to Grow: What to Know Ahead of Next Week's Release

    Tiffany (TIF) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

  • 'Uncut Gems' jeweler explains why now is the time to buy gold
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    'Uncut Gems' jeweler explains why now is the time to buy gold

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  • There’s a Lesson for Luxury in the Coronavirus Crisis
    Bloomberg

    There’s a Lesson for Luxury in the Coronavirus Crisis

    (Bloomberg Opinion) -- With the death toll from the coronavirus rising, the fate of high-end handbag sales still seems of minor consequence. But the $300 billion luxury industry’s over-dependence on Chinese spending was underlined again on Friday when British fashion house Burberry  Group Plc said it could no longer stand by its previous financial forecast because of the spread of the illness.Just two weeks ago, the company shrugged off disruption in Hong Kong to lift its outlook for sales growth excluding currency movements to a percentage in the low single digits, while anticipating that the operating margin would be broadly stable in the year to March 2020. Analysts at Morgan Stanley said Friday’s warning could imply a 5% cut to 2020 earnings.Burberry is particularly exposed to the epidemic. It generates about 40% of its sales from Chinese consumers at home and abroad. That’s above the 35% for the industry as a whole, according to Bain & Co. and Altagamma. So shutting some shops on the mainland and reducing hours at others has an out-sized effect.It’s too early to know what the end result will be for Burberry and the industry as a whole, but one key lesson is coming into sharp relief: While Chinese shoppers are a powerful force for the industry, no brand should neglect their customers closer to home, or stop trying to drum up demand in other corners of the world. When the Chinese market slumped in 2015 and 2016 because of a government crackdown on extravagance and gyrating stock markets, luxury houses all pivoted toward shoppers in Europe and the U.S. They have lost sight of the need to foster these markets since.For Burberry, it’s a particularly sensitive time to face such uncertainty in its biggest market. The group is in the midst of trying to revive its brand, best known for its black, white, tan and red check. While new iterations, such as the TB Monogram, are gaining traction, Burberry is having to prioritize. It’s now unclear whether a fashion show in Shanghai in April, will go ahead. The first Chinese showcase under new designer Riccardo Tisci will have specially created merchandise, clearly a way to build Burberry’s profile amid its rejuvenation efforts.Given these characteristics — high Chinese exposure plus a turnaround strategy — Prada SpA also looks to be at risk, and the Italian maker of the iconic nylon bag has already closed some stores in mainland China and Macau. The list of other luxury companies that are very dependent on China and Hong Kong is long. Swatch Group AG and Richemont are the most exposed, according to analysts at Bernstein. And Gucci, which accounts for 60% of French parent Kering SA’s sales and 80% of its operating profit, has been a hit with Chinese shoppers over the past three years. Anyone who has witnessed the proliferation of Gucci T-shirts, not all the real thing, in cities from Shanghai to Beijing would attest to its popularity.By contrast, Bernard Arnault’s LVMH looks to be better prepared to handle such a shock. With brands including Moet & Chandon champagne, pop star Rihanna’s beauty line and soon Tiffany & Co. jewelry, it has broad diversification by both geography and product range. Last year, for example, 24% of its sales from the U.S.But given the whole industry’s reliance on Chinese big spenders, no luxury or consumer brand with exposure to the them, wherever they shop, will be immune. Burberry said spending in Europe and other tourist destinations was less affected by the outbreak, but it expected conditions here to worsen too. This week, Coach owner Tapestry Inc., Michael Kors and Versace parent Capri Holdings Ltd. and Estee Lauder Cos. all lowered earnings guidance, citing the virus. Even luxury parka maker Canada Goose Holdings Inc., which has a strong following in the U.S. and Europe, has felt the impact of the outbreak. On Friday it lowered its full-year sales and profit guidance.Global luxury sales could expand by just 1% this year, according to analysts at Jefferies, after what they now expect to be a brutal 20% decline in Chinese demand in the first half. Before the outbreak, they were expecting the industry’s sales to grow by 5% in 2020.  While luxury shares have fallen over the past three weeks, valuations remain close to 10-year highs. As I have noted, the stocks have proved remarkably resilient in the face of everything from trade skirmishes to protests in Hong Kong.Burberry’s warning is a stark reminder that that could be about to change.To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • France's Richest Man Gets a Free Lunch From the ECB
    Bloomberg

    France's Richest Man Gets a Free Lunch From the ECB

    (Bloomberg Opinion) -- Bernard Arnault, the boss of LVMH Moet Hennessy Louis Vuitton SE, exceeded even his own incredibly low yield expectations in his company’s giant bond sale this week — which included the biggest corporate issue in euros since 2016. The luxury giant raised 7.5 billion euros ($8.3 billion) and 1.55 billion pounds ($2 billion), over a range of maturities from two to 11 years, to help finance its $16 billion purchase of Tiffany & Co.Two of the five euro tranches were placed at negative yields, meaning investors are paying single A-rated LVMH to borrow money. Arnault’s expectations back in November for yields from the sale of “between 0% and 1%” have been surpassed. Even the 11-year tranche has a coupon of just 0.45%. M&A has never been cheaper.France’s richest man can thank the European Central Bank for this state of affairs. The restart of its 189 billion-euro Corporate Sector Purchasing Program has driven credit spreads ever lower. While the central bank wants to lessen the funding costs of European companies — and local subsidiaries of global firms — to make it easier for them to invest, it may not have been meaning to help a French luxury behemoth snap up an American jewelry icon. It’s almost certain that a bond of this size will have been bought by the ECB (or will be picked at some point in the near future). Often the bank takes up to 20% of eligible issues, and there has a been a real paucity of high-quality credit since the Quantitative Easing program kicked back into life.There was another jumbo corporate sale in Europe this week by U.S. Media giant Comcast Corp., which issued notes worth 3 billion euros and 1.4 billion pounds. This type of sale is known as a “reverse Yankee,” where an American company issues debt, but not in dollars. Maybe we could refer to LVMH’s use of dirt cheap funding in its home currency to buy an American company as a “reverse, reverse Yankee.” The world of finance is ever flexible.International Business Machines Corp. also pulled off a bumper bond deal in Europe earlier in the week; the euro credit market is truly open for business. Although January was a record month for issuance, it was dominated by financials and sovereign, supranational and agency (SSA) issuers. Credit spreads have now also moved close to their tightest ever levels, amid the general flight-to-quality sparked by the Coronavirus outbreak. It’s just a shame that most of these jumbo deals are being used to refinance existing operations more cheaply — rather than spurring an investment boom, or local European mergers and acquisitions that would help the continent’s moribund corporate environment. Still, the ECB is doing what it can; if the financing heads over the Atlantic sometimes, that’s the price you pay for the ocean of quantitative easing that’s been made available. No wonder corporates everywhere are filling their boots.To contact the author of this story: Marcus Ashworth at mashworth4@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Billionaire Bags a Bling Bargain
    Bloomberg

    Billionaire Bags a Bling Bargain

    (Bloomberg Opinion) -- Maverick retailer Mike Ashley likes a flutter at the casino. With his punt on a stake in upmarket handbag maker Mulberry Group Plc, the British billionaire can’t lose.Ashley’s Frasers Group Plc, formerly Sports Direct, said late Monday that it had acquired a 12.5% interest in Mulberry, maker of the iconic Bayswater bag. Ashley, who owns 63% of Frasers, has long dabbled with investments in rivals. Some, such as a holding in JD Sports Fashion Plc, paid off handsomely. But a 30% stake in Debenhams Plc was wiped out when the U.K. department store chain was taken over by its lenders last year.The interest in Mulberry has all the hallmarks of a winner. First, Ashley has likely picked it up on the cheap. Frasers did not disclose the cost. But at Monday’s close, the stake would be worth about 19 million pounds ($24.7 million).Shares in Mulberry have never really recovered from a botched strategy around five years ago, when Bruno Guillon, a former Hermes manager who was chief executive officer at the time, tried to take the leather goods and apparel company upmarket, alienating many of its core customers. New CEO Thierry Andretta and designer Johnny Coca, who joined from Celine, have since returned the brand to its accessible luxury heartland. But the shares remain about 85% off of their 2012 peak.Second, there’s clear strategic logic for Ashley to work more closely with Mulberry. The idea of transforming House of Fraser into the “Harrods of the high street” has been widely mocked because of the department store’s poor performance following its purchase in August 2018. But Ashley clearly wants to take the chain more upmarket. It’s likely to end up as a smaller, more high quality estate.Mulberry is currently in 19 House of Fraser stores, where it trades well. It is also available at Flannels, Ashley’s boutique that sells the likes of Canada Goose and Balenciaga, which is still flying.But there is another reason why Ashley’s interest in Mulberry might pay off. The quintessentially British brand has long been seen as a takeover target. Consolidation in luxury is intensifying, with LVMH’s $16.5 billion purchase of Tiffany & Co and speculation swirling around Moncler SpA and Prada SpA.  While it can’t be ruled out that Ashley will lift his interest further, a big luxury group could also make a move for Mulberry.It is tightly held, so any predator would have to convince the Ong family, which owns 56%, to sell. That may not be easy given that the value of its stake has fallen over recent years. But it may be worth trying given that quality assets are rare, especially those without a big stake held by the families that founded the companies. Longer term, there’s also the possibility that Burberry Group Plc, if its turnaround works, could be interested as part of any future efforts to turn itself into a British luxury conglomerate.In the event of any approach, Ashley not only stands to gain financially, but secures a seat at the table when it comes to this strategically important brand.Conversely, there’s nothing to stop Ashley filling his luxury shopping bag elsewhere. For example Burberry, still in the midst of its turnaround right now, commands a large selling area in Flannels’ new flagship store on Oxford Street for its street wear and rejunvenated accessories.Mulberry might not be this billionaire’s last bling bet. To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • The King of Luxury Is Armed for Uncertain Times
    Bloomberg

    The King of Luxury Is Armed for Uncertain Times

    (Bloomberg Opinion) -- When even LVMH misses estimates, it’s not a good look for the luxury sector.While the owner of the Louis Vuitton and Christian Dior brands still delivered 8% growth in organic sales in the final quarter of the year, this was slightly below the consensus of analysts’ estimates of 8.7%. Organic sales from the fashion and leather goods division — its driver, accounting for 41% of sales and 64% of operating profit in 2019 — rose by 15%. That’s impressive, but still slower than the second and third quarters.The world’s biggest luxury group hasn’t been immune from the unrest in Hong Kong and a slowdown in Japan after the country increased its consumption tax in October. The backdrop could get worse, given the spread of the deadly coronavirus, which has claimed more than 130 lives.LVMH’s chairman and founder, Bernard Arnault, said on Tuesday that if the outbreak was contained quickly — say in two to two-and-a-half months — the effect would be manageable. If it lasted longer, it would be more serious, he added. Given that Chinese consumers accounted for about 35% of luxury purchases last year, according to Bain & Co. and Altagamma, all top end groups are exposed to the spread of the deadly virus. It’s clearly too early to say how things will progress, and with China grappling with how best to stop the spread of a novel virus that’s infected thousands of people, now isn’t the time to worry about handbag sales. But the uncertain outlook speaks to just how dependent many of the world’s global consumer brands are on China’s market and Chinese consumers wherever they are.For example, on Tuesday Starbucks Corp. said that it would have upgraded its financial projections for the year had it not been for the outbreak in mainland China, its most important growth market. While its high-end Roastery in Shanghai may look like a luxury temple, with queues to rival those at Louis Vuitton, it is just one of its 4,000 outlets across the country. The group has closed more than 2,000 cafes in response to the spread of the illness.As for LVMH, while it will be hit just like the other big brands, it may be better placed to weather any impact than most of its rivals. Its exposure to Chinese consumers is around the industry average — about 30% — according to analysts at UBS. Thanks to both its  geographic and product diversification, with sizable operations in the U.S., for example, it is less dependent on Chinese shoppers than many of its rivals.With sales about three times that of its nearest competitor, it also has scope to change its focus, for example by investing in marketing campaigns to attract domestic customers in the Europe and the U.S., where it’s just bought diamond jewelry specialist Tiffany & Co. It also has scope to cut costs in Asia, if the situation deteriorates further. Consequently, LVMH would face a potential 3% fall in this year’s earnings from a 20% drop in Chinese consumption in the second quarter, according to UBS, which expects some other luxury groups would be hit harder. LVMH hasn’t been immune from the sell-off in luxury shares over the past 10 days. It’s down about 6% since Jan. 17. Even with the recent dip, the shares are up about 60% over the past year, and remain at a deserved premium to the Bloomberg Intelligence top luxury peer group.It’s still early days in terms of establishing the toll the deadly virus might take on luxury and consumer groups. But LVMH’s scale and financial strength should make it one of the more resilient.To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Luxury’s Dependence on China Gets Tested
    Bloomberg

    Luxury’s Dependence on China Gets Tested

    (Bloomberg Opinion) -- For a while there, the major luxury companies appeared to be impervious to hard times in Asia. Even as prolonged unrest in Hong Kong hurt sales, and trade talks between the U.S. and China ground on, their stocks kept climbing. That changed this week as fears grow about the spread of a deadly virus in China.With the death toll reaching 25 on Friday, and China restricting travel for 40 million people on the eve of Lunar New Year, the question of what it all means for demand for high-end watches and handbags is obviously of minor concern. Yet it’s an unwanted reminder of just how dependent the industry is on Chinese consumers. Shoppers from the world’s most populous nation, be they in Shanghai, Singapore or San Francisco, probably accounted for about 35% of global luxury goods sales last year, according to Bain & Co. and Altagamma. What’s more, they generated the lion’s share — 90% — of all growth. There’s no reason to think they won’t be just as crucial to the sector’s performance this year too. One analyst, Flavio Cereda at Jefferies, says he expects the bulk of his estimated 5% sales growth (excluding currency movements) in 2020 global luxury sales to come from the Chinese, putting their expected impact at 4 percentage points.  Some companies in particular, including Burberry Group Plc and watchmakers Swatch Group AG and Cartier-owner Richemont, have an exposure above the industry average. It’s too early to say what will be the impact of this new coronavirus that’s gripping China as hundreds of millions of people travel for the Lunar New Year — traditionally a time when revelers spend on goods from the top luxury brands. On Friday, the World Health Organization stopped short of calling it a global health emergency. After first appearing in the central Chinese city of Wuhan, it has spread to locations including Singapore, Hong Kong, Thailand and the U.S. Chinese authorities have been working to revise or cancel planned holiday activities in an attempt to stop any further spreading. Starting on Saturday, Disneyland Shanghai is being closed temporarily.If the crisis intensifies, it could become more problematic. People wanting to avoid the risk of catching the virus will likely curtail anything but the most necessary travel, and avoid crowded areas, with shopping malls among them. That will hurt companies that managed to make up some lost Hong Kong sales at their stores in mainland China.It will also hit sales to Chinese tourists the world over. Although Hong Kong and Macau, which has canceled all of its Lunar New Year festivities, remain the most popular destination for Chinese travelers, Japan, the U.S., Italy and France are also high on their itineraries. Chinese tourists are the highest spenders across most of Europe, according to payments provider Planet, typically splashing out for goods worth about four times that of domestic shoppers. In the U.S., a number of retailers, including diamond jewelry specialist Tiffany & Co., have already said they’ve been impacted by having fewer tourists due to the dollar’s strength.Even though Chinese shoppers have recently been spending more at home, as excursions to Hong Kong fall, they still make the bulk of their purchases when they travel, a time when people are more inclined to blow the budget on impulse buys. Any slowdown in international travel would also hit demand in duty-free shops, including luxury behemoth LVMH’s DFS business and Dufry AG, in which Richemont has a 5% stake.There’s also a broader risk to spending at home and abroad. Luxury thrives when consumers feel happy and wealthy, not when people fears for their health, and that of friends and family. And if the virus has any knock-on effects on the Chinese economy, that would cause ripple effects elsewhere as well. The situation is bringing back memories from 17 years ago when the severe acute respiratory syndrome, or SARS, killed about 800 people. At the time, Chinese shoppers probably accounted for about 10-15% of global luxury sales, much less than today.   So investors will be watching what the impact will be on the big groups. This week, LVMH, Kering SA, Burberry, Richemont and Swatch all fell, as well as U.S. names Tapestry Inc. and Michael Kors-owner Capri Holdings Ltd., all underperforming their respective markets. Some recovered on Friday. Yet valuations remain elevated. That means there’s little comfort as everyone tries to learn more about just what this virus will bring. To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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