Tiffany shares lose sparkle as chief executive departs

Pedestrians pass in front of the Tiffany & Co flagship store on Fifth Avenue in New York

Shares in upmarket US jeweller Tiffany lost some of their lustre on Monday, after the abrupt departure of its chief executive sparked uncertainty following a disappointing holiday season.

Frederic Cumenal has been replaced with immediate effect by board chairman and former chief executive Michael Kowalski, Tiffany said in a statement late on Sunday.

The news sent its shares down 2.5 per cent to $78.49 in New York on Monday, cutting Tiffany’s 12-month rise to 26 per cent.

The group said its board was committed to existing core business strategies, “but has been disappointed by recent financial results”. It has been working to add more sparkle to the customer experience at its stores and freshen its product assortment, something Tiffany said it plans to accelerate.

Mr Cumenal’s departure comes after the company, known for its blue boxes, recorded lacklustre sales during the holiday season. Like-for-like sales fell 2 per cent in the two months to the end of December compared with 2015. Net revenues ticked up to $966m from $961m.

The tepid performance during the key shopping season was driven by a 4 per cent fall in like-for-like revenues in the Americas, its biggest market. Tiffany outlet online attributed the weakness to lower consumer spending and a 14 per cent drop in sales at its flagship store on New York’s Fifth Avenue.

The store sits directly next to Trump Tower and was subject to intense security measures when Donald Trump used the building as his main office during his transition to the White House.

For the fourth quarter, Wall Street analysts believe Tiffany’s like-for-like sales fell 1.1 per cent, marking the fifth consecutive quarterly decline. Revenues are forecast to come in at $1.21bn. The group is due to report on its fourth quarter on March 17.

Tiffany reported a 2 per cent fall in like-for-like sales in the third quarter, though net revenues edged up 1 per cent to $949m.

Mr Kowalski will serve as interim chief executive while the group seeks a permanent replacement for Mr Cumenal. Mr Kowalski was the company’s chief from 1999 to April 2015, when Tiffany promoted Mr Cumenal, who joined the jeweller in 2011 from champagne brand Moët & Chandon, to the top spot.

Mr Cumenal’s departure represents the third big shake-up to Tiffany’s executive ranks in the past 10 months. Former finance chief Ralph Nicoletti left in May to assume the same role at consumer goods group Newell Brands. Tiffany replica also announced last month that it had appointed Reed Krakoff as newly created chief artistic officer.

“While we still consider Tiffany as a foremost luxury brand with multiple long-term drivers, we are concerned with the multiple executive changes,” said Betty Chen, an analyst at Mizuho who cut her rating on the stock to “neutral” from “buy” after the news of Mr Cumenal’s exit.

Simeon Siegel at Nomura added that the timing of the release, which came just hours before Tiffany’s Super Bowl half-time advertisement starring Lady Gaga, “may lead to investor questions”.

Still, Randal Konik at Jefferies said investors would welcome the change of leadership, “as the outgoing CEO did a great job of protecting the brand but didn’t communicate as much urgency in product newness”.

Tiffany And Co CEO resigns amid disappointing sales

Tiffany & Co’s Christmas sales were ‘somewhat lower’ than expected.

On the heels of reporting disappointing sales for the festive period, Tiffany And Co CEO Frederic Cumenal has resigned after less than two years in the role.

The company’s previous CEO and current board of directors chairman, Michael Kowalski, will hold Cumenal’s position until a replacement is found.

A Tiffany And Co statement provided no reason for the resignation, which was effective immediately. Cumenal was appointed CEO in April 2015 and served as Tiffany And Co president prior to that.

In the statement, Kowalski acknowledged Cumenal’s contributions to the company.

“At a time of continuing challenges in the global luxury market, Frederic has enhanced the management team and taken important steps to position Tiffany outlet for success in the long term,” he said.

Kowalski added that the board was committed to current core business strategies, which included enhancing the customer experience and increasing the range of product releases, but was disappointed by recent financial results.

“The board believes that accelerating execution of those strategies is necessary to compete more effectively in today’s global luxury market and improve performance,” he said.

Poor Christmas sales

Frederic Cumenal, Tiffany & Co former CEO

The company recorded global net sales of US$966 million for the two-month period ended 31 December 2016. Net sales for the same period in 2015 totalled US$961 million.

Same-store sales for the two months ended 31 December 2016 decreased 2 per cent.

In announcing the figures in a statement, dated 17 January 2016, Cumenal said the results were “somewhat lower” than expected.

He added that the board did not “anticipate any significant improvement in 2017 to the macroeconomic challenges that we faced this year”.

In the Asia-Pacific region, total sales increased 7 per cent to US$200 million, while same-store sales declined 4 per cent.

In the Americas, total sales and same-store sales were 4 per cent lower than the previous year. The decline in US sales was said to have been exacerbated by a 14 per cent decrease at its flagship Fifth Avenue store.

Total sales in Europe were 10 per cent below the previous year, Japan recorded an increase of 16 per cent and combined sales across all other operating markets rose 33 per cent.

Michael Kowalski, Tiffany & Co interem CEO

As of 31 December 2016, there were 314 company stores – 125 in the Americas, 86 in Asia-Pacific, 55 in Japan, 43 in Europe and five in the United Arab Emirates.

Cumenal’s resignation follows news in January that replica Tiffany And Co design director Francesca Amfitheatrof would leave the company after three-and-a-half years. Fashion designer Reed Krakoff was appointed to newly created position chief artistic officer, effective 1 February.

The company’s 2016 fiscal year results and expectations for the 2017 fiscal year will be released on 17 March 2017.