Inside the troubled house of Tiffany

When Tiffany & Co. executives were looking for ways to boost staff morale, they rolled out an internal app called “Tiffany Joy.” 

They asked workers to post photos celebrating couples getting engaged, colleagues’ big sales and other meaningful moments at stores.

It didn’t take long to turn into a chore. 

Executives started telling US staff they weren’t posting frequently enough and asking workers to “like” posts more quickly. Within a few months, by early 2024, some US employees had given the app a nickname: “Forced Joy.”

What started as a way to make Tiffany a more enjoyable place to work turned into a reminder that the iconic jeweler was not hitting the mark in the US under Christopher Kilaniotis, the head of Americas at Tiffany.

Employees said they were surprised that Kilaniotis, who is responsible for nearly half of Tiffany’s global revenue, focused on an internal app while stores were missing sales targets and employees were leaving for competitors, according to current and former executives, managers and employees familiar with the app who were unauthorized to speak publicly on the matter.

Kilaniotis and Chief Executive Officer Anthony Ledru joined Tiffany from Bernard Arnault’s Louis Vuitton after the fashion tycoon’s conglomerate, LVMH, bought the jeweler for $16 billion in 2021, the world’s biggest luxury acquisition. LVMH aimed to combine the venerable jewelry retailer’s history and design with the conglomerate’s extensive resources to expand Tiffany’s presence in markets like China and India, enhance its digital capabilities and capture a new generation of luxury consumers.

So far, though, Tiffany’s performance doesn’t appear to stack up against Louis Vuitton, Dior, Bulgari and the other prestigious brands under LVMH Moet Hennessy Louis Vuitton SE, which reports earnings on Jan. 28. LVMH doesn’t break out figures for Tiffany but sales at the conglomerate’s watches and jewelry segment dropped 4% in the last quarter, the division’s third straight quarterly sales decline.   

Roughly four years after the Tiffany acquisition, LVMH continues to ask investors for patience. 

“You shouldn’t expect double-digit growth tomorrow. But we are seeing sequential improvement, which is really the results of the execution of the strategy delivering. It takes time, it costs money, and it takes investment. So you have to be patient,” Deputy Chief Financial Officer Cecile Cabanis said on LVMH’s earnings call last quarter, in response to a question about Tiffany’s performance.

Under Ledru, 51, the Tiffany CEO responsible for setting the vision, and Kilaniotis, who oversees the execution  of those strategies in the US, Tiffany has tied employees’ paychecks to sales goals that workers rarely met; reneged on a pledge to pay some bonuses and told store directors they were not doing enough to attract wealthy clients to exclusive gatherings, according to 16 current and former Tiffany executives and employees who weren’t authorized to speak publicly.

The issues are particularly acute at the company’s Manhattan flagship store, which typically generates around 10% of Tiffany’s annual global revenue. After LVMH bought Tiffany, it spent more than $350 million to redesign the Landmark store, as it’s known, the most expensive revamp in the conglomerate’s history.

The number of full-time salespeople at Landmark fell in December by around 40% from a year earlier to roughly 90, according to a person familiar with staffing levels who wasn’t authorized to publicly discuss the numbers. The figure excludes seasonal workers.

There are some signs of improvement. Tiffany’s flagship hit sales targets during the 2024 holiday season. But Tiffany’s market share dropped by one percentage point last year to 12% of global luxury branded jewelry, ceding share to companies such as Parisian jeweler Boucheron, according to data analytics firm Euromonitor International. And revenue growth at existing Tiffany stores globally is forecasted to be more than 10 percentage points lower than at Cartier in the current fiscal year, according to Bernstein analyst Luca Solca.“Tiffany is significantly behind Cartier, given its lower global desirability,” Solca said.

The jeweler is “suffering from a higher middle-class exposure, weaker global reach, a sub-par high jewelry business” and the rise of lab-grown diamond engagement rings has dragged on its bridal business, he said. 

In a statement, a Tiffany spokesperson said, “there is a clear vision of elevation for Tiffany in the US, evident in sales growth, store renovations, people development, talent acquisition, brand image.” Tiffany said the company intentionally “rightsized” staffing at the flagship store in 2024. “This decision was made based on the appropriate and needed coverage.” 

Representatives at Tiffany declined to comment on Kilaniotis’ role in the company’s performance or culture and didn’t make him or Ledru available to comment. Neither executive responded to requests for comment.

One reason cited for some of the staff exits at Tiffany has been an unpredictable bonus system, some of the current and former managers and salespeople said.

In 2023, executives told nearly two dozen managers at Tiffany’s Manhattan flagship that they’d receive their full bonuses after hitting certain revenue targets — figures managers could see on an internal system that tracked sales, these people said. But a few days before the bonuses would have been paid, the company seemed to reverse course. 

The head of the flagship told staff that some of the sales would no longer be allocated to the Manhattan store and didn’t explain why. Since the bonuses are tied to sales, he said managers were no longer going to get their full bonuses. Hasan Halilovic, the head of the flagship at the time, didn’t respond to a request for comment. Tiffany declined to make him available or clarify in what way the sales may have been reassigned.

Kilaniotis and his deputies shifted sales around from other stores and events, which sometimes made it look like the flagship’s performance over the past couple of years was stronger than it actually was, some of the current and former staff said. The practice didn’t distort Tiffany’s overall US sales, just changed how revenue was distributed across stores. It also sowed some confusion among staff over which stores got credit for which sales, these people said. The company declined to provide comment on how revenue was distributed.

A lot was riding on the April 2023 opening of Tiffany’s remodeled flagship store. Arnault’s son Alexandre, whom he had named head of global communications and product, helped generate buzz for the reopening. Marketing campaigns featuring Beyoncé and other celebrities sought to drive more foot traffic to the store. Price increases and expensive art aimed to send the message that Tiffany was becoming more luxurious, some staff said. 

At the flagship, Kilaniotis and Ledru initially told colleagues they wanted to deliver around $300 million in sales from April through the end of 2023 and roughly $350 million in 2024, according to a person familiar with the targets. Within five years or so of reopening, they were aiming for around $500 million in sales, the person said. 

Some staff considered the goals unrealistic and out of touch with the high inflation hitting shoppers, people familiar with the store said. Tiffany had ridden a wave of post-pandemic spending but now, sales across the industry were slowing. And while the revamped flagship was bigger, sales at the original store had peaked at around $325 million about a decade earlier, a time when tourist visits to the store were stronger, the person said. 

Kilaniotis often brought up sales tactics and strategies from his time at Louis Vuitton in South Asia, a region he ran for around eight years prior to taking his first US role at Tiffany in 2021. Ledru told colleagues he brought Kilaniotis on board because he was impressed with the sales growth at Louis Vuitton on his watch, according to current and former staff.

But when staff pointed out that selling $10,000 Tiffany bracelets in the US as the luxury market cooled was harder than selling $2,000 Louis Vuitton handbags in pre-pandemic Asia when sales were soaring, Kilaniotis told them they weren’t working hard enough, current and former employees said. 

 US sales goals are “formulated by market performance, with growth in mind,” the Tiffany spokesperson said. Targets are “rightsized month to month.” 

Kilaniotis was also named in a lawsuit filed in 2022 by Cartier, which is owned by LVMH rival Richemont, for allegedly aggressive recruiting practices. Cartier, where Kilaniotis once worked, claimed he pushed managers to poach its employees. The companies settled the case in 2023. Tiffany declined to comment and representatives for Cartier didn’t respond to requests for comment. 

Kilaniotis and his team started sending nightly revenue updates to LVMH’s billionaire chairman, who oversees a more-than $390 billion conglomerate with more than 6,000 stores. They told colleagues that Arnault wasn’t satisfied with the sales figures and urged staff to work harder, some of the current and former staff said. 

Some managers said they thought Tiffany’s strategy to host what are called Blue Book sales, exclusive events targeting the jeweler’s richest clients, was backfiring. At gatherings in places like Miami and Utah’s Deer Valley Ski Resort, customers were asked to make informal pledges to spend hundreds of thousands of dollars on jewelry while attending.

In the spring of last year, Tiffany managers were preparing to host a Blue Book event at the Beverly Hills mansion where staff were told the infamous horse-head-in-the-bed scene from The Godfather was filmed. Clients would be treated to a five-star hotel stay and get first dibs on one-of-a-kind Tiffany jewelry, some of which cost tens of millions of dollars apiece.

In the days before the event, Kilaniotis told two dozen store directors on a video call that they failed to sign up enough wealthy attendees, according to some of the current and former employees and a text exchange between colleagues seen by Bloomberg News.

Kilaniotis told the directors he didn’t want to hear excuses that the US luxury market was slowing when stocks of companies like Meta Inc. were soaring and billionaires were pouring money into the US elections, these people said.

He said that if the wealthy were donating to the US election, they could also afford to buy Tiffany jewelry, according to current and former staffers. The lack of interest from clients, Kilaniotis said, was proof the directors hadn’t worked hard enough to cultivate relationships with America’s richest shoppers.

During the call, the store managers stared at their computer screens in awkward silence, the current and former employees said. They had already tried to tell Kilaniotis and his deputies why the events weren’t meeting targets for attendance and spending, they said.

Some managers thought the spending threshold, which was raised from around $150,000 to around $500,000 at some events after the LVMH acquisition, was too high, these people said. Also, they thought the events were too long and that Tiffany was hosting too many of them.

During the Beverly Hills event, Kilaniotis told some staff he wasn’t happy with the turnout and decided to repeatedly lower spending thresholds for clients to attend and extended the two-week event to squeeze out more sales, current and former employees said.

Some staff said those decisions undermined the air of exclusivity Tiffany was trying to cultivate. One client quipped that some of the last-minute invitees looked like they were on their way to Disneyland, according to a person familiar with the exchange.

‘Nothing to Celebrate’

Negativity was on display again later that summer, when employees congratulated a colleague for a $2,800 sale — and were met with admonishment. 

“There is nothing to celebrate,” Halilovic, the head of Landmark at the time, wrote on a work WhatsApp group chat seen by Bloomberg News. He explained that congratulations were only in order for sales above $50,000 or items from Tiffany’s Icons line, a high-end collection that Kilaniotis has focused on selling.

The $2,800 sale was neither.

To some staff, shutting down a harmless compliment was an example of how management’s pursuit of ambitious sales goals had chipped away at a company culture that longtime employees described as collegial, a place where people stuck around for decades. 

In a statement, the Tiffany spokesperson said: “We deeply value our employee community and are committed to a work environment that fosters respect, fairness, safety and offers our people the opportunity to develop their career and succeed.”

At Landmark, staff hit monthly sales targets four times in the seventeen months through September 2024, according to a person familiar with the figures. Missed sales targets, lower commissions, staff exits and a difficult work culture have made it harder for the company to attract workers from competitors like Cartier, Harry Winston and Van Cleef & Arpels, leaving some open positions unfilled, according to people familiar with the hiring practices.

The Tiffany spokesperson said staff turnover at Landmark dropped by 5% last year compared to 2023, but declined to provide a turnover rate. Tiffany also said annual average commissions increased by 5% during the same timeframe, declining to provide specific figures.

Holiday Season

In recent months, Kilaniotis and his deputies have appeared to take steps to turn the tide on employee exits and sales appear to be inching back, according to a person familiar with the current strategy. 

When the new head of Landmark, Cyril Arpin, took over in September, he told staff he wanted to make the monthly sales targets easier to hit, this person said.

Staff then hit their October goal and also made the November target of $26 million – just barely, the person said. In December, the busiest month of the year, staff reached the goal of nearly $50 million, this person said. That was roughly flat from a year ago.

The Tiffany spokesperson said the three months through December 2024 marked the highest fourth-quarter sales ever at Landmark but didn’t provide specific figures. That led to a 49% increase in commissions paid to salespeople there, the spokesperson said. Tiffany declined to make Arpin available to comment and he didn’t respond to requests to comment.  

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