The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Lady Gaga jumped from the roof of Houston's NRG Stadium during the Super Bowl halftime show on Sunday, a splashy comeback for a superstar whose shine has faded recently .
If only Tiffany & Co. would take a similar leap of faith.
The luxury jeweller — while launching a new ad campaign starring the same Lady Gaga — on Sunday stunned investors by quietly disclosing it would drop CEO Frederic Cumenal. Tiffany said former CEO Michael Kowalski would serve again temporarily while the company looks for a replacement for Cumenal, who had failed to turn around its sagging sales since taking over in April 2015.
Tiffany shares fell 7 percent in pre-market trading on Monday, as the surprise resignation prompted analysts to downgrade the stock and reduce probably too-optimistic sales and earnings estimates.
ADVERTISEMENT
By the time the market opened, however, shares were down only 2 percent. Perhaps investors started to consider that a shakeup might be just what the 179-year-old brand needs.
To draw back devotees, Tiffany will have to leave its comfort zone and move faster than it's used to, truly embracing change rather than just showing ads about it. It could start by reaching out to customers traditionally overlooked by the jewellery industry.
For instance, it could market to the growing number of women who are buying jewellery for themselves, rather than focusing on the stereotype of men buying shiny objects for wives and girlfriends. Contrast that idea with a Tiffany ad campaign this past holiday season encouraging women to send anonymous notes to their partners with not-so-subtle reminders of what Tiffany merchandise they want to get for Christmas. (Holiday sales fell by 2 percent from a year earlier.)
Then there's the growing demand for men's jewellery, watches, and other accessories. And an LGBTQ market that is still under-served. And China's millennials, who are leaving behind their parents' obsession with Western luxury icons to embrace more up-and-coming brands.
Tiffany should also take a page from its fast-fashion brethren. To stay relevant to a new generation, it will have to roll out new standout products more than once every two-and-a-half years, points out Jefferies analyst Randal Konik. It also needs to figure out e-commerce; its online sales as a percentage of overall revenue haven't budged in three years.
Yes, there are significant things Tiffany can't control; namely, Trump, taxes, and tourism. A strong dollar will continue to hurt tourism, as will potentially higher border taxes. That's not to mention the physical barricades keeping tourists from easily meandering into the flagship store on Fifth Avenue in New York City, which neighbors Trump Tower, and where the jeweler gets roughly 10 percent of its sales. In the latest quarter, sales at that store dropped by 14 percent.
For such headaches, Tiffany should do its best to estimate the impact and warn Wall Street, taking a one-time hit and perhaps lowering expectations even further to better set the groundwork for an upcoming turnaround.
For everything else that Tiffany can control, it should follow Lady Gaga's lead and get its act together.
ADVERTISEMENT
By Shelly Banjo; editor: Mark Gongloff. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Related Articles:
[ Tiffany & Co. CEO Frederic Cumenal ExitsOpens in new window ]
[ Tiffany Appoints Reed Krakoff as Chief Artistic OfficerOpens in new window ]
The sharp fall in the yen, combined with a number of premium brands not adjusting their prices to reflect the change, has created a rare opportunity to grab luxe goods at a discount.
Fashion’s presence at Milan Design Week grew even bigger this year. Savvy activations by brands including Hermès, Gucci, Bottega Veneta, Loewe and Prada showed how Salone has become a ‘critical petri dish for dalliances between design and fashion,’ Dan Thawley reports.
The Hood By Air co-founder’s ready-to-wear capsule for the Paris-based perfume and fashion house will be timed to coincide with the Met Gala in New York.
Revenues fell on a reported basis, confirming sector-wide fears that luxury demand would continue to slow.