Evidence of China’s slowing economy popped up in the sales numbers posted by Tiffany & Co.
While revenue rose 4 percent to just above $1 billion in the third quarter, industry analysts were anticipating a bigger boost. Some of that unexpected drag is taking place because spending by Chinese tourists is falling.
Company shares plunged more than 11 percent before the opening bell and there is some concern that sales at Tiffany are a dark omen for the entire luxury retail sector.
Chinese economic growth declined to a post-global crisis low of 6.5 percent in the quarter than ended in September. A trade fight with the Trump administration is pressuring communist leaders to energize economic activity that has weakened since Beijing clamped down on bank lending last year as it tries to rein in surging debt.
There was greater spending at Tiffany by local customers in all regions during the quarter. That, however, was partly offset due to lower spending by foreign tourists, primarily Chinese. While Tiffany experienced strong sales growth in mainland China, CEO Alessandro Bogliolo said that there was weaker-than-expected spending by Chinese tourists in the U.S. and Hong Kong.
Tiffany earned $94.9 million, or 77 cents per share, in the quarter, a penny better than expected, according to analysts surveyed by Zacks Investment Research. The company earned $100.2 million, or 80 cents per share, a year ago.
Tiffany stuck to its full-year earnings of $4.65 to $4.80 per share.
Source: The Associated Press