A predominantly brick and mortar retailer- Tiffany & Co (NYSE:TIF) has reported poor fourth-quarter and full-year results. There are several reasons for these results, but analysts will also seek to get insights if e-commerce retailers like Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) have penetrated this premium jewelry segment.
The results of Tiffany &Co report:
Tiffany & Co (NYSE:TIF) reported both fourth quarter as well as full year results before the markets opened today. The quarterly sales fell for the first time in five years. The company reported revenues of $1.29 billion for the fourth quarter of 2014 as compared to $1.3 billion reported for the same period last year. Adjusted diluted EPS were higher at $1.51 as compared to $1.47 for the fourth quarter of 2014. The results were in line with the expectations of the analysts though investors were not impressed.
Revenues for the full year of $4.25 billion were higher than those reported for last year. The only silver lining was that sales from Asia/Pacific region, particularly China, Australia and Singapore were encouraging. The guidance for 2015 were also not very encouraging with Tiffany & Co (NYSE:TIF) expecting net earnings to fall by 30% in the first quarter. The company expects to touch $4.42 billion in revenues in 2015.
Foreign exchange was one main culprit foreign exchange effects were responsible for reducing net sales by almost 7% for the full year and 3% for the last quarter.
E-Commerce platforms continue to soar:
Though Tiffany had a bad quarter due to foreign exchange fluctuations, many other traditional brick and mortar retail giants are facing heat from e-commerce platforms like Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY).
These companies are now focusing on their supply chains so that they can target the reach of traditional retailers. These companies are exploring newer technologies so that their material can reach their customers faster. Opening more distribution centres is not solving the problem. Last mile deliveries still remain problematic and also costly. Amazon is taking a giant step in overcoming this problem.
The company has always expressed their desire to use drones for this purpose. The Federal Aviation Administration (FAA) was not willing to play ball. Current rules restricted the use of drones for commercial purposes. But, there has been a softening in their stance. FAA has granted Amazon.com, Inc. (NASDAQ:AMZN) a limited license to test its drone delivery system over private land in Washington state. This is only a tiny step as Amazon will have to address several issues before drone deliveries can be started. The foremost concerns relate to privacy and safety.
Other issues relate to technological aspects and need to be sorted out. However, the giant strides made by mapping technologies are very encouraging. Google Inc (NASDAQ:GOOG) has achieved tremendous success with its driverless car and Amazon will be interested in some of the technologies deployed by Google. The company is also a leader in mapping technologies.
It continues to appear that brick and mortar retail chains will continue to be hammered by the new upstarts of the retail chains.