Diamonds are not Tiffany & Co.’s best friend.
The luxury retailer took a hit in the second quarter because the strong dollar has had a chilling effect on tourists’ spending in the US.
“The adverse effects … have been even more significant than initially expected,” said Chief Executive Frederic Cumenal, during a call with analysts on Thursday.
Tiffany reported a 15 percent decline in profits and reduced its guidance for the year.
Same-store sales in the Americas fell 2 percent in the three months ended July 31, while global sales were down slightly, to $991 million from a year ago.
Tiffany shares fell 2.1 percent on the news, to $83.29.
Despite the weak showing, some analysts say Tiffany is navigating the economic situation well, pointing to factors that are simply out of Tiffany’s hands.
“There was nothing that raised a red flag for me,” said Oppenheimer analyst Brian Nagel.
In fact, Tiffany said it plans to raise prices on some of its products to counter the impact of the strong dollar, something it did not do during the most recent downturn.
“They know they have pricing power,” Nagel said.
What’s more, sales in Europe were up 19 percent, and some Asian markets were up double digits; Japan was up 21 percent.
But the US accounts for 48 percent of Tiffany revenues, and its flagship Fifth Avenue store accounts for nearly 10 percent alone.