Tiffany & Co. shares are under fire because a prolonged trade war could tarnish sales to Chinese shoppers, some of the company's best customers.
The jeweler generated about 17% of its net sales in Greater China last fiscal year, according to its full-year earnings report. It had 33 stores in China at the end of January, more than in any other Asian country. Strong demand in China drove its Asia-Pacific sales up 13%, and its planned launch of a local e-commerce website this year could fuel further growth.
Unsurprisingly, management has called out the US-China trade war as a risk to the business. An economic slowdown in China could hurt sales and profits at stores in Greater China, as well as stores in other territories that serve Chinese tourists.
Chinese consumers spend more on average than Americans, Europeans, and other shoppers, CEO Alessandro Bogliolo said on the group's full-year earnings call. They are "big lovers of gold and platinum, especially with diamonds," he said, pointing to "very strong" sales of engagement rings to them.
If the Chinese economy weakens, their taste for Tiffany's bling could sour.