During the quarter, the company opened its 24th store in Jinan, China. At quarter end, there were Tiffany 68 stores in the Asia-Pacific region. And the company plans to open two more stores in China in the fourth quarter and two stores in Taiwan, one of which was opened two weeks ago in the Shinkong Mitsukoshi Ximen store in Tainan.
The company operated a total of 54 stores in Japan, and they performed well in the quarter. In local currency, total sales in Japan increased 9%, primarily due to increases in the average price per jewelry unit sold, as well as unit growth in most jewelry categories, and comparable store sales rose 5%, which is above the 5% increase in the same period last year. However, the yen weakened more than 20% versus the U.S. dollar in the past year. Therefore the 9% sales growth in yen translated into a 13% sales decline in dollars.
Now turning to Europe, results were mixed in the third quarter. Total sales increased 7% due to increases in both average price per jewelry unit sold and in the number of jewelry units sold. Overall in the region, however, the softness in Continental Europe was offset by the sales growth in the UK, which reflected higher local customer and foreign tourist demand, but with no discernible pattern.
Tiffany opened its 7th store in Stuttgart in the Breuninger department store in Germany, now totaling 36 company-operated stores in Europe at quarter end. The company also completed a major renovation of its Frankfurt store and recently relocated its Florence store to a more spacious nearby site on Via Tornabuoni. It plans to open one more store in Italy before year-end.
Now turning to Middle East, comparable store sales increased 1%, representing the first quarter of comparability for its five stores in the United Arab Emirates, five in Dubai and two in Abu Dhabi, that were converted from wholesale distribution to company-operated locations in the middle of last year. The management is excited about the sales growth potential for Tiffany in the Middle East to enhance brand awareness and expand its store and customer base.
Web Presence – Internet
Complementing its store base, Tiffany has a strong global web presence, including e-commerce in 13 countries as well as informational sites in a number of additional countries. Moreover, these websites are featured in 9 languages. As a reminder, worldwide Internet sales growth, included in each region, in the third quarter was in line with retail sales growth in stores.
It’s worth mentioning here that the company launched its newly redesigned website in October. With its greater storytelling and video content as well as its improved navigation, the new site is turning out to be more engaging with visiting customers. And for the first time, Tiffany is showcasing its Blue Book Collection of million-dollar jewelry. Early indications show that visitors are spending considerably more time on the new site.
As a note, for the third consecutive year, Tiffany was recently ranked number 1 by L2, a think-tank for digital innovation, in their Digital IQ Index, assessing the digital competence of 80 global watch and jewelry brands.
Merchandising highlights for Q3 2013
Tiffany saw the strongest sales growth in statement, fine and solitaire jewelry, meaning jewelry with gemstones at mid to higher price points in the quarter. There were also some initial signs of improvement in the fashion jewelry category. Strong statement jewelry sales in the quarter was largely attributable to the success of an exclusive event in New York which was held in October.
Important highlights in fine jewelry in the quarter include: strong sales in the Enchant Collection; extraordinary Yellow Diamond collection; new jewelry designs with pink diamond accents and our Victoria collection; sales of Cobblestone and Select collections.
Keys Collection, which is both fine and fashion jewelry categories, is enjoying a strong sales resurgence. After it was launched four years ago, this popular collection is showing continued strength in gold and platinum styles accented with diamonds, and is now also benefiting from newer designs in platinum accented with colored diamonds.
In fashion jewelry category, the big story right now is the success of the recently launched ATLAS collection in various metals and styles but with noteworthy popularity in gold pieces. The Ziegfeld collection in silver pearls and onyx continues to post strong results five months after the premiere of The Great Gatsby movie. And Tiffany’s Metro collection continues to be a solid performer.
Engagement jewelry sales in the third quarter were higher in most regions. The latest innovation is Tiffany’s Harmony engagement ring collection, which was launched exclusively in Japan last year and rolled it out globally earlier this year.
The company management maintains that there are a lot of new products in the development stages under the leadership of its new Design Director, Francesca Amfitheatrof, who joined Tiffany in September and informed that she’s already fully immersed in the design process with her team, especially focused on reinvigorating the fashion jewelry category.
Regarding its watch business, the company is proceeding with plans to design, produce, market and distribute own Tiffany & Co. brand watches. However, the previously disclosed claims and counterclaims between Swatch and Tiffany are still pending in a confidential arbitration in the Netherlands, and the panel will issue its decision at an undetermined future date.