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Tiffany noted that although its global sales dropped by a small fraction when compared to the same period last year, the operating profit surged by about 25% year on year.
Tiffany & Co (NYSE: TIF) reported that its e-commerce sales have continued to show strong growth despite the legal tussle with Louis Vuitton owner LVMH Moet Hennesy Louis Vuitton SE (EPA: MC). According to the earnings report released on Thursday, the company’s sales and operating earned for both the months of August and September show a considerable resurgence from its earlier lows from the first quarter.
Tiffany noted that although its global sales dropped by a small fraction when compared to the same period last year, the operating profit surged by about 25% year on year. And the company said that the high recorded sales are expected to continue in October and in the fourth quarter. Tiffany also reported that besides the 25% rise in the operating earnings, the worldwide sales almost doubled in August and September and the growth saw accounts for about 13% of the entire net sales for the period under review ended Sept. 30.
Sales in Mainland China as noted also saw huge sales growth particularly in Tiffany’s T1 Line, the Gold, and Gold with Diamond brands, the new products in the firm’s luxury jewelry brands. Tiffany remains optimistic that the sales in the United States which declined considerably by up to double-digits between August and September as a result of the impaired tourism sector will pick up in the coming months.
Tiffany’s cash balance turned out to be in excess of one billion dollars while it plans to repay a $500 million draw made earlier in the year and expects its cash balance sheet to top $900 million by year-end.
Tiffany’s stock closed at $121.69, a 2.25% growth on Thursday following the earnings release.
On Tiffany Legal Battle with LVMH
In the earnings report, Tiffany (TIF) also weighed in on its legal battle with LVMH and noted that the reasons behind the move by the French-based luxury giant to back out of its November 2019 acquisition deal worth about $16 billion are not accepted under the law.
As reported by Fox Business, Tiffany (TIF) accused LVMH of trying to sabotage the $16 billion acquisition deal while doing everything at his disposal to pay the lowest amount of money in acquiring the company should it have to.
Firing back, LVMH accused TIF of grossly mismanaging the business during the pandemic as the company paid out huge dividends to investors while most luxury brands attempted to be more conservative with cash.
With Tiffany’s (TIF) Chairman Roger Farah submitting that the company has adhered to the terms of the acquisition deal with LVMH, alleging that had the French company believed in its claims against Tiffany, that it would not have gone through the extra mile it did to secure the letter from France Foreign Minister in its bid to halt the deal.
While the war of words continues, the courts will eventually be the decider of the fate of both companies moving forward.