Tiffany’s sparkle speaks against economic relapse
Europe may be burning and the U.S. smoldering, but the comfortably-off are splurging on their blue-boxed trinkets. Tiffany is reaping the benefits, posting double-digit sales growth across the globe in its third quarter, most notably in Europe where receipts rose 22 percent in the period. Together with a bright outlook, that suggests well-heeled and aspirational consumers aren’t anticipating another painful downturn.
In 2008, the near-collapse of the financial system unnerved the usually confident, comfortable class. Tiffany’s sales tumbled. Its holiday season that year was a disaster, with sales plunging 21 percent. And it wasn’t just consumers wanting to spend their way up the social ladder that dropped off. Even the firm’s traditional customers cut back. That proved that even those with plenty of money — with the possible exception of the billionaires club — need confidence if they are to indulge themselves.
Now Tiffany’s customers are back. Net income rose 27 percent in the quarter ending in October, and the company managed something that has been unthinkable to many other retailers — it passed on price increases. The expectation is for a strong holiday season this year.
One implication of Tiffany’s rebound is that the wealthy don’t seem concerned about persistently high unemployment in the United States or the potential risks of central banks on both sides of the Atlantic printing money. In Europe, they don’t seem held back by worries that the Irish bailout could spill over or that the governments of Portugal and Spain are overstretched.
They didn’t see the 2008 crunch coming either. But having been bitten then, richer consumers don’t seem to be twice shy. Sure, they are insulated from many everyday financial concerns. But if Tiffany’s experience is anything to go by, there’s little fear of a slide back into the economic abyss. Events could change that, but for now it’s one indicator that should give economic worriers a glimmer of hope.