Tiffany & Co reported on a three-month sale that missed estimates as Chinese tourists spent less than expected in Jewish stores in the United States and Hong Kong, a shortage that sent shares of the company by 13 percent.
Investors were also disappointed by the failure of a 181-year-old company to raise its annual profit in relation to the holiday season and increase sales of the same sales slower than expected.
Tiffany shares fell 11.8 percent and closed at $ 92.54.
Executive Director Alessandro Bogliolo tried to convince investors that while consumption from China was declining, sales in the country were robust.
"We can speculate on the reasons behind the tourists who spend behind China, but the reality is that Tiffany brand is attractive to Chinese customers, as confirmed by the steady strong sales growth throughout China in the quarter," he said at the investor's invitation.
Some of the increase in demand throughout China can be attributed to Tiffany to lowering prices in the country after the Chinese government reduced tariffs for luxury products, he said.
Bogliolo said that Tiffany has diverted more supplies throughout China, where consumers spend more than abroad.
"As for tourism, what we do is try to keep track of customers while we are spending … We are increasing our inventory in China because demand has increased there," Bogliolo said.
"Reducing Chinese tourism spending is worrying and can be a reflection of tense relations with the United States," said founder of Retail Metrics Ken Perkins, referring to the US-China trade dispute. "Chinese growth has slowed down to see strong spending on land encouraging."
Tiffany predicts a $ 4.65 to $ 4.80 per-year profit per share. Analysts averaged $ 4.83 per share.
The unchanged prospects reflect, among other things, the planned increase in Tiffany's marketing costs to attract younger customers to their stores and the cost of rebuilding their leading store in New York, the company said.
The goldsmith refreshed its collections with affordable items such as pendants and earrings that appeal to the millennia gravitating on competitors with lower prices, such as Danish Pandora A / S and Signet Jewelers.
Bogliolo said the company also invested in marketing to specifically meet Chinese customers and tourists.
"Of course, if there are fewer Chinese tourists traveling, we redirect our media from travel locations – airports, etc. – more to domestic media, usually digital," he said, citing recent platinum launch and the Diamond Collection of Paper Flowers in China.
The company's net income in New York dropped to $ 94.9 million, or 77 cents per share, in the third fiscal third quarter, ending October 31, from $ 100.2 million or 80 cents per share a year ago.
Total revenues rose 3.7 percent to $ 1.01 billion.
Analysts have an average expected revenue of 77 cents per share on an income of $ 1.05 billion.
Sales of the company's comparative sales, excluding the impact of currency changes, increased by 3 percent, while analysts expected an average of 5.3 percent growth, according to IBES Refinitive data.