Hours before the kickoff for Sunday night’s match-up between the New England Patriots and Atlanta Falcons, Tiffany & Co. (TIF) stole the headlines -- not for its first-ever Super Bowl commercial featuring superstar halftime performer Lady Gaga, but for an announcement its CEO was leaving the struggling iconic brand, effective immediately.
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Frederic Cumenal, who joined the luxury retailer in 2011 after 15 years at French luxury conglomerate LVMH, departed after just more than two years at the helm. While the company has begun a search for Cumenal’s successor, Tiffany said Chairman Michael Kowalski will serve as interim CEO. Kowalski is no stranger to the C-suite, having served as the company’s CEO from 1999 until he handed the reins to Cumenal in 2014. Tiffany’s board of directors said while it is committed to its current core business strategies, it has been “disappointed” by recent financial results.
During the all-important holiday shopping season, Tiffany reported a 2% decline in global sales at stores open for at least a year. In the U.S., same-store sales declined 4% from 2015 as the company saw fewer transactions from local customers and a 14% drop in sales at its New York Fifth Avenue flagship due to heavy police presence and traffic disruptions at Trump Tower following President Donald Trump’s election.
Tiffany’s first foray into Super Bowl advertising was seen as part of an effort to appeal to younger generations. It included a 60-second spot just before the Pepsi (PEP) Halftime Show featuring Lady Gaga and her self-professed lifelong love of the brand as an introduction to its new HardWear collection that “pays tribute to the strength and spirit of the modern woman.”
“Obviously Lady Gaga is a very relevant personality, especially with today’s youth generation. So Tiffany choosing her as the new face of a new product line shows us the company’s wherewithal to keep the Tiffany brand timeless but also fresh,” said Jefferies equity analyst Randal Konik, who holds a buy rating on the stock with a price target of $102.
In its effort to strengthen its customer base, Tiffany has tried to widen its appeal to younger demographics, which include millennial and Generation Z customers. Last year, the company rolled out custom Snapchat filters at its locations, began work with celebrity endorsements – like Gaga – for the first time in its storied history, and said it planned to update product offerings more frequently to lure fast-fashion buyers as it pushed more of its lower priced silver jewelry.
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“Our big gripe has been seeing only one new standout jewelry collection on average ever 2.5 years, which is simply not enough,” Konik said. “The release of the new HardWear collection, partnership with Gaga, and Super Bowl TV spot are all welcome, but we want this rapid pace of change to continue aggressively.”
Tiffany is hardly alone in its move to shakeup company brass amid a struggle to boost sales and attract younger demographics. Ralph Lauren (RL) last week announced its CEO will depart in May after clashing with the company’s founder over creative direction. Gap’s (GPS) struggling Banana Republic brand saw the ouster of its president earlier this year after disappointing holiday sales, and Macy’s (M) is said to be considering strategic alternatives – including a possible sale to Canadian department-store owner Hudson’s Bay.
Tiffany, which saw a nearly 3% slump in its share price Monday to $78.06, will report fourth-quarter earnings results on March 17 and expects a mid-single digit profit decline.