Shares of Blue Nile rocketed as much as 34% in early afternoon trading on Monday as it agreed to a $500 million buyout from private equity firms Bain Capital and Bow Street. The all-cash deal represented a 34% premium over Blue Nile's closing price on Nov. 4. Tiffany & Co. shares rose about 3% in response to the transaction.
Similar to Blue Nile, Tiffany has battled several quarters of sluggish sales of engagement rings in the U.S. and muted spending by consumers on jewelry. Overseas sales have been particularly challenging as well.
Tiffany reported second-quarter earnings, that adjusted for one-time items declined 5% from the prior year to 86 cents a share. Executives foresee full-year sales declining by a low-single-digit percentage from the prior year, and earnings dropping by a mid-single-digit percentage.
Net sales declined 6% year over year to $932 million, slightly missing analyst forecasts for $933.9 million. In the Americas division, same-store sales dropped 9%, excluding the impact of the strong U.S. dollar. Wall Street was looking for a 7.8% increase. As in prior quarters, the strong dollar continues to impact tourist spending in major U.S. markets for Tiffany such as New York City, where it has prominent stores on Fifth Avenue and Wall Street.
Meanwhile, same-store sales in Tiffany's Asia Pacific region plunged 9% on a constant currency basis in large part to "significant" declines in Hong Kong. Both a strong Hong Kong dollar and the Chinese government anti-corruption crackdown on gift-giving for party officials continue to weigh on luxury goods players.