Tiffany & Co. is recovering from the pandemic and economic fallout as luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE tries to dump the $16.2 billion acquisition of the jewelry chain.
Global net sales in the last two months only dropped a bit from a year ago and earnings based on 2019 data increased approximately 25%.
The company’s cash balance was in excess of $1 billion at September’s end – and the outlook for the end of the year will be approximately $900 million.
“While we still expect full-year results to be substantially impacted by COVID-19, we are very pleased with the way the business has rebounded following the first quarter and continues to rebound in the third quarter, especially in Mainland China, and to recover in the United States,” CEO Alessandro Bogliolo said.
Tiffany tried to force through the $16 billion deal that LVMH agreed to last November on Tuesday with a counterclaim lawsuit calling the French group’s reasons for reneging the deal “legally and factually baseless.”
Tiffany also accused LVMH CEO Bernard Arnault of using “every means and opportunity at his disposal to ensure that LVMH pays the lowest possible price for the assets he desires.”
At the end of September, LMVH blamed Tiffany’s mismanagement of its business during the pandemic. It noted that the jewelry chain paid the highest possible dividends while the company was “burning cash and reporting losses.”
“No other luxury company in the world did so during this crisis,” LVMH said in the statement. It noted that other examples of what it called mismanagement in the filing including slashing capital and marketing investments and taking on additional debt.
Tiffany fought back what it called “baseless and misleading counterclaims” filed by LVMH. It argued that it was another “blatant attempt” to evade its contractual obligation to pay the agreed price for Tiffany.
“Tiffany has acted in full compliance with the merger agreement, and we are confident the court will agree at trial and require specific performance by LVMH, “said Tiffany’s Chairman Roger Farah in a statement. “Had LVMH actually believed the allegations made in its complaint, there would have been no need for LVMH to procure the letter from the French Foreign Minister as an excuse for the refusal to close.”