The Younger Strategy Worked, And Tiffany Broke Its Historical Sales Record Last Year.

The pformation plan launched by the US jewellery brand Tiffany in order to restore the loss of young consumers seems to have achieved initial success.

According to the fourth quarter and annual results released by Tiffany in January 31st, the brand sales in 2018 increased by 7%, reaching a record $4 billion 400 million, a 4% increase in sales, a 58% rise to 586 million US dollars in net profit, and a rise in gross margin from 62.6% in the previous year to 63.3%.

In the fourth quarter, Tiffany net profit rose 230% to $205 million compared to the same period last year. However, the 1% decline in brand store sales did not rise to 0.8% market expectations.

The brand attributed the growth of its year-round performance to the increase in local consumer spending, while the slowdown in the fourth quarter was due to a slowdown in the expenditure of foreign tourists.

As of the end of the year, Tiffany operates 321 stores.

By Region:

Sales in the Americas rose 5% to 2 billion US dollars in 2018, up 5% from sales and 618 million US dollars in the fourth quarter.

In 2018, sales in the Asia Pacific region increased by 13% to US $1 billion 200 million over the same period, of which the Greater China region led a growth of comparable sales growth of 5%, but in the fourth quarter, sales fell 1% to 316 million US dollars, compared with a 3% decline in sales.

Japan's annual sales increased by 8% to $643 million year-on-year, and sales grew 3% to 196 million dollars in the fourth quarter.

Annual sales in Europe increased 3% to $504 million year-on-year, but the 3% quarter to 3% US $162 million in the fourth quarter was mainly due to slower growth in foreign visitor spending.

By category:

Tiffany sales of classic jewellery products recorded a year-round increase of 11%, sales in the fourth quarter increased by 15%, wedding jewelry products increased by 4% and 3% respectively, while sales of designer jewellery fell by 1% and 8% respectively.

Aware of the changing market trend, Tiffany is determined to radically reform the group business and appoint Alessandro Bogliolo, a former CEO of Bvlgari and Diesel, as its chief executive officer.

After taking office, he put forward six strategies, including expanding brand influence, launching new products, strengthening store display, establishing a full channel sales system, consolidating the leading position of brands in key markets, establishing efficient business models and strengthening team building. Over the past year, Tiffany product mix and marketing methods have been diversified.

Alessandro Bogliolo said in its earnings report that the group is still in the early stage of its long-term performance plan, and will continue to change in 2019. The previous changes were far from perfect, and even made some mistakes. Although sales in 2018 reached the best record since 2014, the growth trend in the second half year has weakened, which mainly reflects the challenges and uncertainties of the external market environment changes.

It is worth noting that Alessandro Bogliolo also stressed that the slowdown in growth in the fourth quarter of the Greater China region was mainly due to the decline in overseas purchases of Chinese tourists due to the strong US dollar, but the demand for Tiffany stores in mainland China remained strong during the holidays.

Chinese tourists have more and more influence on brands. The average customer price of Chinese consumers in Tiffany far exceeds that in the US, Europe and even Japan, which is very important for the future development of the brand.

In fact, Alessandro Bogliolo pointed out that the brand realized that the consumption expenditure of Chinese tourists abroad dropped sharply, even down to 30%.

With the policy of lowering import tariffs and purchasing agents, the most promising consumer group is more willing to buy luxury goods in the local market.

In order to stimulate the Chinese market, the brand will continue to open new stores in the two or three line cities and expand the electricity supplier business.

For a long time, Tiffany has always wanted Chinese tourists to go to places like Fifth Avenue.

But Thibaud Andre, head of research at Daxue Consulting, a consultancy, argues that this thinking needs to be changed, pointing out that making Chinese consumers buy foreign brands locally is more conducive to brand loyalty.

Pascal Martin, a partner of OC&C strategy consulting in Hongkong, also said that the consumption pattern has obviously changed and Chinese people are shopping more and more domestically.

Tiffany is already taking action against changes in consumption patterns.

Last August, Tiffany opened a flash store on Tmall luxury platform Luxury Pavilion to sell the latest Rhyme Series at the time. This is also the first time that its new jewelry has been released online.

In addition, to meet the rising demand of Chinese local consumers, Alessandro Bogliolo said in an interview that Tiffany is moving more products to China.

He believes that luxury brands should pay more attention to long-term sustainable development than the present. Both domestic and global consumer markets are still full of potential.

Chinese consumers' demand for luxury goods is not slowing down, but will gradually flow to China's local market.

However, the question is whether Tiffany can maintain a strong momentum in domestic localization marketing when other luxury goods companies are scrambling to make adjustments and compete fiercely.

Pressure does not just come from competitors such as Pandora, Cartier and other jewellery brands.

Research firm McKinsey has predicted that the growth of brand jewellery in the future is likely to come from non jewellery companies in the luxury sector, such as Dior, Hermes, Louis Vuitton and other jewellery series to expand its sales category.

Giorgio Armani also launched the premium jewelry series for the first time this week.

Tiffany can not be taken lightly. After all, young consumer preferences are becoming more and more difficult to understand, and the risks of the market are increasing day by day.

As of yesterday's close, Tiffany (TIF.NYSE) shares rose 0.32% to 103.13 U.S. dollars, the current market value of about 12 billion 500 million U. S. dollars.

Author: Yohanna