Things are looking a little less sparkly for Tiffany & Co. these days. The iconic jeweler released its 2014 earnings report on Friday, showing modest growth for the year. Unfortunately, the first part of 2015 is looking even dimmer.
Worldwide net sales rose 5 percent to $4.25 billion, while net earnings were $196 million compared to a net loss of $104 million the previous year (due to a legal charge). In the fourth quarter specifically, though, sales fell 1 percent to $1.3 billion. The company blames the strengthening of the U.S. dollar, which has lead to a decline in tourist spending stateside. Currency fluctuations were also an issue in Japan, where sales fell 13 percent.
But things are about to get worse before they get better. The company is expecting a 30 percent decline in net earnings for the first quarter, followed by a "more modest" decline in the second quarter. By the middle of the year, however, Tiffany expects net earnings will be increasing in the "double digits." To help make that happen, the company plans to open 10 to 15 new stores, primarily in the Asia-Pacific region, where sales have been strongest. Tiffany President Frederic Cumenal said in a conference call that the company's design team is also hard at work refreshing its product assortment.
In August of last year, the design team launched Tiffany T, a range of unfussy and appealing fashion jewelry conceived by its newish design director Francesca Amfitheatrof. With prices ranging from a few hundred dollars to around $20,000, the line has been a hit, according to Vice President of Investor Relations Mark Aaron, who said during the call that it has been generating the "highest ever average transaction size for a new fashion jewelry collection at Tiffany."
Tiffany may always have fans of the classic collections it's been selling for decades, but the jeweler knows it needs to introduce modern updates if it wants to keep customers excited — and new ones coming through the door.