Asia is quickly becoming the most important market for Tiffany & Co.
The luxury jeweler released its second quarter earnings yesterday, and its net sales worldwide were up 7 percent to $993 million for the quarter compared to the same period last year due to growth in the Americas and Asia-Pacific.
Greater China and Australia had particularly strong growth in the second quarter, driving net sales for the Asia-Pacific region, excluding Japan, up 14 percent for the quarter to $237 million. Sales for the first half of 2014 rose 15 percent overall in the region to $498 million with comparable store sales up 7 percent for the quarter and up 9 percent for the first half of the year.
According to MarketWatch, Asia accounts for 37 percent of Tiffany’s global sales with China accounting for over half of the company’s non-Japan Asia sales, estimated at 12 percent of global sales.
Tiffany’s strategy to focus on the wedding business in China is paying off big. Engagement and wedding rings – with an average price tag of $3,600 – account for a significant portion of its China business. Due to China’s fast growing wedding industry, which recently topped $50 billion, the demand for diamond jewelry in China isn’t likely to abate any time soon. In fact, the market potential is huge.
Diamond wedding rings are a fairly recent development for Chinese couples with only 30 percent of Chinese brides receiving an engagement ring compared to over 80 percent in markets such as the United States and Japan. Additionally, with a fragmented Chinese jewelry market, in which Tiffany & Co. has a 0.5 percent market share, there is plenty of room for growth.
Moreover, Tiffany & Co. has been able to succeed in China despite the Chinese government’s luxury crackdown as a result of its wide-range product portfolio, which offer products in the ultra, premium, and affordable luxury categories, according to Forbes. With jewelry ranging from $80,000 rings to $200 tie clips, there is a market for everyone, even those consumers looking to avoid conspicuous consumption. So far, Tiffany has been able to strike a balance by enticing consumers at different price points without compromising its luxury image.
image credit: tiffany.cn, marketwatch