Tiffany makes inroads with millennials as Hepburn era fades

JEWELRY IS DISPLAYED in the window of a Tiffany & Co. store on Fifth Avenue in New York. /BLOOMBERG FILE PHOTO/VICTOR J. BLUE
JEWELRY IS DISPLAYED in the window of a Tiffany & Co. store on Fifth Avenue in New York. /BLOOMBERG FILE PHOTO/VICTOR J. BLUE

NEW YORK – Tiffany & Co. is making headway with millennials who seek fashion jewelry while forgoing some of the treasures of the Audrey Hepburn generation: wedding and engagement rings.

Growth in fashion and designer jewelry helped boost revenue to $959.7 million during the second quarter, even as sales of wedding rings underperformed, the company said Thursday. The sales were well above the $930.4 million analysts had projected and the biggest quarterly surprise since early 2015.

The results reflect Tiffany’s strategy to win back customers, including younger shoppers, by renovating stores and offering new designs, such as the HardWear collection promoted by singer Lady Gaga. The collection features bracelets, rings and earrings with dangle balls – items that may appeal to younger shoppers.

“One of the more promising areas of progress is the company’s attempts to better connect with younger consumers – a constituency with which it had lost traction,” said Neil Saunders, managing director of GlobalData Retail.

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Lady Gaga was introduced as the new face of the jeweler in an ad that aired during the Super Bowl in February. The chain had long been most closely associated with Hepburn’s image, which was embedded into popular culture with the 1961 movie “Breakfast at Tiffany’s.”

Shares of the company rose 0.9 percent to $89.50 at 10:27 a.m. in New York after earlier gaining as much as 4.3 percent, the biggest intraday advance since March. The stock had gained 15 percent this year through Wednesday’s close.

‘Decent Quarter’

Earnings were 92 cents a share in the second quarter that ended last month. That topped analysts’ average 86-cent projection. Same-store sales exceeded estimates in the U.S. and Japan while missing in Europe and the Asia-Pacific region.

“It’s a decent quarter, it’s good enough to support the stock here,” said  Brian Yarbrough, an analyst at Edward Jones & Co. “But across the board, the business remains difficult. At some point we really need to see some acceleration in comps or there’s going to be questions,” he said, referring to same-store sales.

The jeweler is betting Alessandro Bogliolo, who takes over as chief executive officer in early October, will further invigorate the brand.

The results follow an unexpected sales decline in the first quarter. Tiffany’s past results drew the attention of activist investor Jana Partners, which said the shares were undervalued. Another investor, CtW Investment Group, has been pushing for more diversity and younger directors on the jeweler’s aging board.

Tiffany maintained its forecast for the full year, calling for sales to grow by a low single-digit percentage. Excluding some items, profit is expected to climb by a mid-single-digit percentage from $3.75 a share in the last fiscal year.

Tiffany is focused on innovating designs in jewelry and luxury accessories and making marketing more impactful to bolster the in-store and online experience for customers, interim CEO Michael Kowalski said in a statement.

Stephanie Wong is a reporter for Bloomberg News.