Sales during the last two months of 2018, or the holiday period, were below expectations, Tiffany & Co reported last week, with worldwide net sales declining 1% to $ 1.04 billion and comparable sales declining 2%.

However, on a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, both net sales and comparable sales were equal to the prior year, the jeweller said.

Alessandro Bogliolo, Chief Executive Officer, said, “With continued strong sales growth in mainland China (by a double-digit percentage), solid results in Japan and healthy growth in global ecommerce sales, overall holiday sales results came in short of our expectations which had called for modest year-over-year growth.”

He attributed the relatively disappointing results to “lower sales to foreign (primarily Chinese) tourists globally, and to softening demand attributed to local customers in the Americas and Europe, which we believe may have been influenced more than expected by external events, uncertainties and market volatilities.”

Across regions, net sales were a mixed bag. In the Americas, total net sales declined 1% to $ 514 million, with slight declines attributed to spending by both local customers and foreign tourists; comparable sales were equal to the prior year. On a constant- exchange-rate basis, both total sales and comparable sales were equal to the prior year.

In Asia-Pacific, total net sales of $226 million were 3% below the prior year, reflecting higher sales attributed to local customers, with strong growth in mainland China, but softness in certain other markets that are more dependent on foreign tourist spending; comparable sales declined 4%. On a constant- exchange-rate basis, total sales were equal to the prior year and comparable sales declined 2%.

Japan was the only large market to remain in positive territory with total net sales rising 4% to $ 150 million and comparable sales rising to 4%. Management attributed the sales growth to higher spending by local customers. On a constant-exchange-rate basis, both total sales and comparable sales increased 4%.

In Europe, total net sales of $ 132 million were 4% below the prior year, and comparable sales declined 5%, due to varied results by country and modest declines in spending attributed to both local customers and foreign tourists. On a constant-exchange-rate basis, total sales rose 1% and comparable sales declined 1%.

Other net sales of $ 14 million were 11% below the prior year due to lower comparable sales in five stores in the U.A.E.

Tiffany has opened ten Company-operated stores in the year-to-date and closed four. At December 31, 2018, the Company operated 321 stores (124 in the Americas, 90 in Asia-Pacific, 55 in Japan, 47 in Europe, and five in the UAE), versus 316 stores a year ago (125 in the Americas, 87 in Asia-Pacific, 54 in Japan, 46 in Europe, and four in the UAE).

In terms of categories, Tiffany & Co said that during the holiday period Jewellery Collections increased 2%, while Engagement Jewellery and Designer Jewellery sales declined 3% and 8%, respectively.

Looking forward Bogliolo said, “As I reflect on 2018, we accomplished what we set out to achieve.  By increasing the levels of strategic investment spending in certain areas, we recovered lost ground from several years of soft sales trends and we expect to report record levels of net sales and net earnings in fiscal 2018.”

Based on these holiday period sales results, Tiffany & Co said it now expects worldwide net sales for fiscal 2018 to increase by 6%-7% over the prior year both as reported and on a constant-exchange-rate basis.

It also added that given external challenges and uncertainties, management’s preliminary view for fiscal 2019 includes worldwide net sales increasing by a low-single-digit percentage over the prior year as reported and on a constant-exchange-rate basis.