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Tiffany & Co is the world's most celebrated jeweller, with an unrivalled reputation for sophisticated luxury. Already a well-established haunt for wealthy New Yorkers by the 1950s, the store was introduced to a wider market by the movie adaptation of Truman Capote's book Breakfast At Tiffany's. But unlike some luxury brands, which have lost a little sparkle in recent years following their adoption by aspirational or newly wealthy buyers, Tiffany's remains resolutely upscale and as a result coasted almost unaffected through the economic downturn of the early 2000s. The recession of 2008/09 proved a little more challenging, but the company has bounced back comparatively well since 2010, although in recent months the strong dollar has depressed tourist and international sales.
Who handles advertising? Click here for Agency Account Assignments. The group declared advertising and marketing costs of $302m in fiscal 2015. A major part of this related to production and distribution of the Tiffany Blue Book catalogue.
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Tiffany rode the wave of strong sales in the luxury market for most of the past two decades. The retailer has a unique global reputation, even if the vast majority of sales are still concentrated in two markets of the US and Japan. The Tiffany brandname is almost certainly the most widely known in the fine jewellery market, and the group vigorously protects its reputation for high quality. Although the brand is most closely associated with diamonds, it has successfully diversified into other lines. To broaden its appeal, the company attempted to establish separately branded subsidiaries in the early 2000s to target a different clientele, but revenues from this area remained small and most of these spin-offs lines were discontinued mid-decade.
Tiffany & Co is best known for its branded fine jewellery. The company launches new collections each year, produced inhouse or from exclusive designs by Elsa Perretti and Paloma Picasso, as well as the late Jean Schlumberger. Architect Frank Gehry joined the roster in 2005, and introduced his first collections in 2006. Tiffany is especially famed for its white jewels, notably diamonds, platinum, pearls and silver. Not much in the way of "Bling Bling" chunky gold jewellery here! In fact the company made its name with diamonds in the 19th century, effectively inventing the modern diamond engagement ring. It has attempted to invent a new tradition with the launch of diamond "Celebration" rings. Other gemstone-based collections include Tiffany Keys, Soleste and Victoria.
The group has also introduced a number of different themed non-gemstone fashion jewellery collections, including Atlas (inspired by the design of the Atlas Clock above its 5th Avenue store), modernistic Tiffany T, and bold Tiffany 1837. Another playful new line is Return To Tiffany, featuring chained padlocks. In 2016, the group hired former Coach design director Reed Krakoff to take charge of design of its small but growing range of non-jewellery accesories and housewares. The company's newest line is Tiffany HardWear, launched in 2017 with a marketing campaign featuring Lady Gaga.
Lower priced fashion jewellery accounted for 33% of sales in 2016, designer jewellery for 12%, engagement & wedding jewellery for 28%, top-of-the-range "statement" and fine jewellery for 20%, and watches, houseware & other accessories for the remaining 7%. To keep sales rising, the company has introduced a greater proportion of lower-priced items. In 2016, around 45% of jewellery sales were of designs below $530, a price band significantly lower than main rival Cartier. Despite the lower pricing, Tiffany remains one of the world's most successful retailers when measured by sales per square foot of shop space, second only to Apple Stores.
The brand is also famous for the distinctive blue ribbon-tied boxes in which it packages its products. Like all other jewellers, Tiffany sources a significant proportion of its diamonds indirectly from De Beers DTC, but has attempted to increase the quantity derived from other suppliers including Aber Diamond in Canada.
Jewellery accounts for 93% of sales, but the group also retails Tiffany-branded timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories. A recent focus of attention has been an expanded range of wristwatches. In 2007, the group agreed a 20-year partnership with Swatch to manufacture a range of high-end timepieces under the Tiffany name, and a line of lower-priced watches was introduced in 2010. However Swatch issued notice for termination of that partnership in 2011 amid bitter recriminations on both sides of obstruction and lack of cooperation. The case finally came to arbitration in 2013, and the judge ruled against Tiffany, awarding Swatch $500m in damages. Tiffany relaunched its presence in the watch market in 2015 with a collection of timepieces produced inhouse.
In 2006, the group agreed to license Luxottica to produce a range of eyewear under the Tiffany brandname, launched in 2008. A range of branded fragrances were produced under license for several years by Chanel; however that range was discontinued in 2006. A new license was issued to Coty in 2016. Although the majority of items are sold via consumer channels, the group also markets its services to corporate customers, selling a range of its retail products as well as additional items made specifically for the business market, such as trophies.
In recent years the group has made a determined effort to strengthen its position as the world's most prestigious jeweller, offering items of the highest possible quality. It makes a point of not offering price promotions to avoid devaluing the brand, and issued a lawsuit in 2004 against online auction firm eBay after it found that almost three-quarters of all items sold by independent buyers as genuine Tiffany on the site were actually fake. That case finally came to court in 2007, and Tiffany was stunned when the trial judge ruled in favour of eBay. He added that he felt that that the current systems employed by eBay to guard against the sale of fakes were adequate, and that it was up to luxury companies such as Tiffany to police their trademarks themselves. Tiffany launched an appeal against that decision, but that too was rejected in Spring 2010.
By early 2015, Tiffany & Co operated around 310 stores and boutiques in 24 countries, including 95 in the US and 56 in Japan. Like other companies in the luxury sector, Tiffany has been keen to increase control over its retail operations since 2000, and has gradually withdrawn from wholesaling its products to other retailers, especially in key markets. However it still supplies a limited range of merchandise to third-party retailers in Latin America, the Middle East and some Asia Pacific markets. Its most significant Asian territory is Japan, which accounted for 13% of total group sales in 2015. The majority of sales are made through concession stores within the country's major department stores, primarily Mitsukoshi stores in Tokyo and other retailers in the rest of the country. There are also four standalone stores.
The company has also cautiously opened its arms to a less wealthy clientele, opening a number of shopping mall boutiques, and introducing sterling silver key rings, pendants, charm bracelets and other items priced under $100. A separate retail brand, Iridesse, was launched in 2004, selling only pearls and pearl jewellery. However that business was discontinued during 2009 because of economic pressures. In 2002 the group acquired Little Switzerland, a chain of duty-free jewellery and giftware stores in the Caribbean and Canada. However this business was sold again in 2007. In 2003 Tiffany began moves to establish a separate retail presence for jewellery designer Temple St Clair, in whose business it had acquired a controlling stake in 2002. Targeting a hipper and more streetwise market, Temple St Clair jewellery uses more gold and coloured gems than traditional Tiffany designs. The first outlet opened in California in late 2003, followed by one in New Jersey in 2004. However Tiffany sold this business as well in 2005. In 2009, the group acquired Lambertson Truex, a maker of handbags and other leather goods.
Group net sales peaked in fiscal 2007 at $2.9bn, before declining in both 2008 and 2009. However, a strong recovery followed, pushing sales and profits to record levels. For 2011, revenues rose by 18%, and then by a more modest 4% in 2012 to $3.79bn. In 2013, an additional 6% lift pushed revenues over $4bn for the first time, at $4.03bn. Operating income also increased significantly, but net earnings were dented by the Swatch litigation, plunging by 56% to $181m. Adjusted earnings excluding legal would have been $480.6m. The improving US economy pushed revenues up to a record $4.25bn in 2014, while net earnings rebounded to $484m, also a best-ever performance.
Revenues for 2015 slipped 3% as a result of currencies to $4.10bn. At constant rates, the increase would have been 2%. Net earnings slipped back from the previous year's high to $463.9m.
The company derives around 41% of its revenues from the US, primarily through retail stores, but also from B2B, catalogue and internet marketing operations. The group mails out around 12m catalogues and other items annually to a list of around 4.2m individuals in the US. New York's flagship Tiffany & Co store alone accounts for around 10% of sales. Japan is by far the biggest international market, accounting for 13% of group sales in 2015 (or $530m), followed by the UK which contributed around 5%.
Tiffany has been a quintessentially American brand for almost 180 years. Charles Lewis Tiffany and John Young established a fancy goods emporium in New York in 1837. Initially Tiffany & Young specialized in costume jewellery and stationery. Breaking with traditions in retailing up to that point, all items sold in store had a clearly marked, non-negotiable price. Later they began to make their own fine jewellery, and also sold clocks, silverware and ornaments. In order to distinguish their goods the partners introduced a distinctive box in a robin's-egg shade of blue. The colour gradually became known as Tiffany Blue, and was later established as a trademark.
In 1853, Charles Tiffany took full control of the business, renaming the store Tiffany & Co. Business prospered. The company became a supplier to President Abraham Lincoln, and produced ceremonial swords, flags and surgical instruments for the Union Army during the Civil War. In 1871, Tiffany introduced its famed Audubon sterling silver flatware range, inspired by 19th century Japanese painting. Towards the end of that decade Charles Tiffany made headlines when he acquired what became known as the Tiffany diamond, one of the world's finest yellow diamonds, weighing in uncut at 287 carats. It was cut down to 127 carats, with an unprecedented 92 facets. The company was also commissioned to redesign the Great Seal of the United States, which continues to grace the modern one-dollar bill. The purchase and exhibition in 1887 of some of the French Imperial crown jewels added to Tiffany's fame.
In 1902, control of the company passed to Charles's son Louis Comfort Tiffany, already a well-established artist. He introduced glassware into the store, launching the much prized Tiffany lamps. However the Great Depression severely damaged business at the end of the 1920s. Following Louis Tiffany's death in 1933, the company faced financial difficulty and the family raised capital by selling a 30% shareholding to Bulova Watch Co in 1938. As a result of the outbreak of the Second World War, the group closed its sole international retail outlets in London and Paris, and devoted its attentions to the US market. In 1950, the store's new Fifth Avenue headquarters were celebrated in Truman Capote's novel Breakfast at Tiffany's, which introduced fictional society girl Holly Golightly. The book only reinforced the desirability of the brand. Poor Holly can't afford to shop at Tiffany; instead she cheers herself up by spending early mornings gazing longingly at its windows.
Now threatened with a full takeover by Bulova, the Tiffany family sold their shareholding in 1955 to conglomerate Hoving Corporation, which also owned Bonwit Teller. In 1961, Walter Hoving bought out both his own group and Bulova to take Tiffany independent again. At around the same time a film adaptation of Capote's novel became a big hit, establishing actress Audrey Hepburn as the quintessential Tiffany woman. In order to exploit the wider interest in the store, Tiffany opened its first regional US store in 1963, in San Francisco, quickly followed by Houston and Beverly Hills. In 1972, after a 30-plus year absence from the international market, a Tiffany outlet was launched in Tokyo, as a concession within the Mitsukoshi department store. It was the beginning of an association that continues to this day.
In 1979 the company was acquired for $94m by Avon, which decided to reposition the brand towards more affordable designs. This met with little success and CEO William Chaney led a management buyout seven years later to take the company independent once again. The first European store since 1939 opened in London in 1986, and a year later Tiffany launched an IPO to pay off debt. At the time there were only eight stores in the US, but Chaney initiated a careful but steady expansion of the chain to 45 outlets in the US by 2002. He stepped down the following year and was replaced by Michael Kowalski. Steady expansion has continued in the US and also in Europe and Asia.
Last full revision 7th July 2016
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