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Tiffany & Co., LVMH\u2019s leading jewelry maker, is planning to downsize a flagship store of more than 12,000 square feet in Shanghai, people familiar with the matter said, as sales of luxury brands plunge<\/a> in the world\u2019s second-largest economy.<\/p>\n Tiffany, which opened the two-floor store in Shanghai\u2019s Hong Kong Plaza in a high-profile ceremony in late 2019, has decided to give up about half of the space, said the people, asking not to be identified because the deal is private. The brand will vacate the space later this month, the people said, and the landlord is already in talks with potential new tenants.<\/p>\n Both Tiffany and Lai Sun Group, which controls the high-end mall\u2019s landlord, Lai Fung Holdings Ltd., didn\u2019t immediately respond to requests for comment.<\/p>\n Tiffany\u2019s pullback from China\u2019s finance hub highlights the increasingly challenging business environment that global luxury giants have to navigate during an economic slowdown and a property market slump. Shoppers in the country are turning more price-sensitive, looking for bargains either in the\u00a0gray market<\/a>\u00a0or overseas, such as Japan where the currency is weak. That\u2019s triggered significant sales dips for high-end labels, curbing growth and adding pressure to profit margins.<\/p>\n LVMH\u2019s watches and jewelry segment saw its revenue fall 3% in the first half of this year from the year before, making it one of the worst-performing sectors. Profit from recurring operations for this segment fell 19%.\u00a0<\/p>\n Tiffany also asked Lai Fung to lower rent for its Shanghai flagship, one of the people familiar said.\u00a0<\/p>\n The store, located in Shanghai\u2019s core business and shopping district, features Tiffany\u2019s first Blue Box Cafe in China which is also its third in the world. The store is currently among the brand\u2019s largest in Asia. The cafe will remain after the downsizing, the people said.<\/p>\n The 187-year-old brand has been missing LVMH\u2019s ambitious sales targets after the luxury empire of billionaire Bernard Arnault acquired the jewelry seller in 2021. Tiffany has also seen employee departures recently due to lower commissions than before, with some defecting to competitors and taking some of their loyal clients with them, Bloomberg News reported earlier this year.\u00a0<\/p>\n The brand is further squeezed by rivals, losing market share to companies including Cie Financiere Richemont SA\u2019s Cartier.<\/p>\n<\/div>\n\nRecommended reading:<\/strong>
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