Saturday, March 8, 2014

Success story : Charles Tiffany's Jewelry Stores

(from IBD 3/10/14)

A blue box tied with a white ribbon is synonymous with Tiffany — the storied emporium from which dazzling jewels are bought and an acclaimed novella and Oscar-winning movie wrought.

As for the true saga of Tiffany & Co. (TIF), it's as compelling as any jewel, novella or movie — and ongoing. Tiffany employs more than 9,900, with 290 stores in 25 countries, according to Mark Aaron, the company's vice president of investor relations.

Tiffany & Co.'s flagship store on the corner of New York's Fifth Avenue and 57th Street opened in 1940 and it secures 12% of the company's global sales, according to the New York Times.

Charles Tiffany wearing a top hat in the 1880s at one of his stores, which today number 290 in 25 countries.

Meanwhile, Tiffany shares have been on a 430% stock market run since 2009.

monthly chart

Behind the sparkle is a story of struggle, discovery, risk taking and a passion for quality, luxury and craftsmanship. All from a visionary with the celebrated last name — Charles Lewis Tiffany.

Tiffany (1812-1902) founded this glittering jewelry and silver store — now 177 years old — while helping shape the American ideal of luxury.

Glittering Retail

"Charles Tiffany fundamentally grasped the idea that shopping and retailing should be an entertaining experience," Linda Buckley, vice president of global relations for Tiffany & Co., told IBD. "It should be fun, make you feel better and fulfill a shopper's dream.

Tiffany saw his store as a way to add beauty to a person's life, and he had an innate sense that in 19th century America a growing affluent class could be reached with high-quality products."

Tiffany's journey, like so many brilliant 19th century entrepreneurs — think Dr. Scholl, Adolphus Busch, Oscar Mayer — was not an overnight success. He required a persistent ambition.

The son of a textile manufacturer, Charles was born and raised in Killingly, in the northeast corner of Connecticut. He wasted little time getting a good feel for money, running the family mill store by age 15.

Buckley notes that as Tiffany grew up in Killingly, he was close to Bridgeport, Conn., the home base of P.T. Barnum, the showman and businessman celebrated for his colorful marketing.

"Undoubtedly, Barnum influenced Tiffany," said Buckley, "and we clearly see it in how Tiffany developed his own set of promotional skills and its effect on key business ventures."

Two centuries later, he's Killingly's most celebrated resident.

"We still rave about him," Marilyn Labbe, executive director of the Killingly Historical & Genealogical Society, told IBD.

As he turned 25, Tiffany looked to the big time: New York City.

He saw a chance to make serious money with a store, so he borrowed $1,000 — worth $25,000 now — from his father and, with friend Eben Young, founded Tiffany & Young. The shop sold stationery and fancy goods such as jewelry, silverware, bronze curiosities from India, Chinese porcelain and the latest French accessories.

On opening day — Sept. 14, 1837 — sales totaled less than $5.

Tiffany & Young limped along from there. Then came 1841, with marriage to Harriet Young, sister of his partner, Eben Young, on the way to six children. Also that year came a third business partner, J.L. Ellis.
With a new name — Tiffany, Young & Ellis — Tiffany perfected the marketing tips he'd picked up from Barnum.

Take the way Tiffany's profited from France's 1848 revolution and the fall of King Louis Philippe. Buckley notes how aristocrats who had benefited from the king suddenly ran for their lives, needed cash, looked to load their diamonds and crashed the Continent's jewelry market.

Tiffany pounced. He persuaded his partners to pour profit from their fledgling business into diamonds — marking the first appearance of major gemstones on a mass scale in America.

Tiffany & Co. went on to sell those diamonds at great profit, rocketing the firm beyond solvency.
Further PR glory came when the press noted the carat-topping deal and crowned Charles Tiffany the King of Diamonds.
"That move established Charles Tiffany," Buckley maintains.

Mining For More

In 1851, Tiffany saw gold in the silver market.

To meet Victorian society's rising demand for the bright metal, he teamed with New York silversmith John Moore and established the company's design and silver manufacturing heritage.

Tiffany instructed Moore to make the silverware on par with English sterling — 92.5% silver and 7.5% base metals — a standard that America eventually adopted.

That decade, Tiffany's firm shone as one of the world's leading jewelers and silversmiths.
Also in 1851, Tiffany opened a shop in Paris, opening the door to establishing an international market, according to the Killingly Historical Society's files.

Young and Ellis retired in 1853. Tiffany purchased their shares and renamed the firm Tiffany & Co.
Tiffany's pursuit of excellence continued.

Knowing in 1858 that a telegraph cable was winding its way under the Atlantic Ocean, he bought 20 miles of extra metal that the financier Cyrus Field was tossing in the trash heap.

Tiffany cut it into 4-inch brass for paperweights, canes, umbrella handles and watch charms. A sensation resulted on the day the souvenirs went on sale. The clamoring crowds, vying for a slice of history, had to be controlled by police.

Still another Tiffany PR coup came at 1867's Paris Exposition.

"In America during the mid-19th century, said Buckley, "Tiffany established dominance in the silver market, but the store was as yet little known in Europe. But at the Paris World's Fair, Tiffany challenged the Europeans and received the grand prize for silver, the first time an American design house was so honored by a foreign jury."

Rock-Solid Move

Then came another smart move.

In 1877 one of the world's largest yellow diamonds was discovered in South Africa. Tiffany leapt again, buying the 287.42-carat stone for $18,000, which translates to $385,000 today.

Acclaimed gemologist George Kunz supervised the stonecutting of the Tiffany Diamond into a cushion-shaped gem with a final weight of 128.4 carats and an unprecedented 82 facets. "It sparkles as if lit by an inner flame," said Buckley.

Audrey Hepburn famously wore the yellow gem in publicity stills for the 1961 film "Breakfast at Tiffany's."

Buckley estimates the stone has the height and width of a quarter. It's on display at Tiffany's flagship store in Manhattan.

Such Tiffany brilliance drew global plaudits. His company served as the royal jeweler to the crowned heads of Europe, as well as the Ottoman emperor, the czar of Russia and the shah of Iran.

Tiffany died at age 90, leaving an estate worth $35 million — worth a billion today. Louis Tiffany, Charles' second son and heir to the business, became the firm's first official design director in 1902, immediately following his father's death.

Louis established the Tiffany Artistic Jewelry unit, where precious objects were manufactured.

Art historian Antonio Masi said of the son: "Louis Comfort Tiffany was an internationally acclaimed American designer, a leader of the Art Nouveau Movement, who was revered for his whimsical jewelry and stained-glass creations. Though gone more than 80 years, his artistry moves and uplifts us still."

That style came from Charles Tiffany's brand, of whom Buckley said: "We know when we see a blue box tied with a white bow that the same care and quality goes into that box, no matter what's in it."

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