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Why Tiffany Stock Fell 12% in December

By Demitri Kalogeropoulos - Updated Apr 14, 2019 at 9:51PM

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Global growth concerns added to investors' sour outlook for the jewelry giant's business.

What happened

Luxury jeweler retailer Tiffany (TIF) lost 12% last month, compared to a 9% slump in the broader market, according to data provided by S&P Global Market Intelligence.

The decline closed out a disappointing period for shareholders, with the stock down 22% in 2018 to trail the S&P 500's 6% drop.

A woman wearing diamond jewelry.

Image source: Getty Images.

So what

Investors initially reacted harshly to Tiffany's fiscal third-quarter report, issued in late November, and that pessimism carried into the following month. Sure, December's swoon was amplified by surging volatility in the broader market. But rising concerns about a growth slowdown, particularly in China, added to investors' angst. Tiffany recently cited softening demand in China and Japan when it reported surprisingly weak sales.

Now what

CEO Alessandro Bogliolo and his team affirmed their full-year sales and profit targets in late November, but investors will be scrutinizing its holiday-quarter earnings report for signs that growth is still slowing. In the meantime, Tiffany is pouring cash into growth projects, including increased marketing spending and an improved e-commerce infrastructure, so it can build on its nascent recovery. Sales are predicted to rise in fiscal 2018 for the first time in three years, and executives want to protect that positive momentum even if it means accepting lower profitability over the short term.

Check out the latest Tiffany & Co. earnings call transcript.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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