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Of course, Tiffany jewelry heavy exposure in Japan has hurt company sales lately, as the Japanese recession drags on. But betting that the future could be much brighter last year Chaney increased the company’s debt 30%, from $124 million to $161 million, and took a $32.7 million after-tax charge to buy back the dozens of boutiques. Tiffany will now run the Japanese boutiques on its own. The change win boost gross margins.
The company will have a much tougher battle in Europe, however, where Tiffany has opened six stores to sell Tiffany 1837 Lock bracelet and Elsa Peretti Open Heart bracelet since 1986.
While the Japanese have a yen for an Western luxury goods, Europeans have a long-established tradition of their own luxury houses.
Gil McWilliam, assistant professor of marketing at the London Business School, says Tiffany’s brand is still somewhat lackluster in the U.K.
While the name may suggest “expensive, glitzy and glamorous” to women 40 and older who remember the movie Breakfast at Tiffany’s, to younger women it implies “local, cheap and tacky,” says McWilliam. “There must be at least 20 discotheques with the name any in many of the scruffy towns around the U.K.,” she adds.