Tiffany bows to activist pressure, shakes up board in search for new CEO

Dive Brief:

Iconic jeweler Tiffany & Co. is increasing its board from 10 members to 13 through an agreement with activist hedge fund Jana Partners LLC and former Bulgari CEO Francesco Trapani, who together own 5.1% of outstanding shares.
Trapani himself will join not only the Tiffany board but also the committee charged with finding a new CEO to replace Frederic Cumenal, who abruptly stepped down earlier this month. Along with Trapani, the new board members are Tory Burch co-CEO Roger Farah and former Jarden Corporation CEO James Lillie. They’ll take their positions no later than March 6, according to a press release.
Tiffany Chairman and interim CEO Michael Kowalski also said he will step down “after an appropriate period” once a new CEO is found.

Dive Insight:

Tiffany has been scrambling in several recent quarters as tourist sales have dropped off thanks to the strong dollar. The company has moved more assertively online, inking a deal with Net-A-Porter to reach millennials without resorting to price reductions. The American jeweler’s flagship New York City store also finds itself at a disadvantage thanks to its proximity to Trump Tower, which has seen a rash of protests, especially since the November election, and with President Donald Trump stating he’ll be spending significant amounts of time at his Manhattan home and office. Tiffany has attempted to mitigate the impact of increased security on its flagship store’s sales and traffic.

Cumenal stepped down after Tiffany reported worldwide same-store sales declines of 2% over the holiday period, weighted down by “post-election traffic disruptions” and the proximity of its flagship store to the now heavily-guarded Trump Tower in New York City. Cumenal's departure represents the latest in a series of changes across Tiffany's C-suite. In September, the company named former Canadian Pacific Railway chief financial officer Mark Erceg as its CFO; he replaced Ralph Nicoletti, who left after just two years to become CFO of consumer products company Newell Brands. Last month, Tiffany also promoted Reed Krakoff to the newly created role of chief artistic officer: Krakoff, who spent 17 years as the creative director of accessories retailer Coach, held a senior design role at Ralph Lauren, before serving as a creative collaborator for Tiffany with the relaunch of a luxury accessories collection.

Tiffany also announced job cuts last month, but did not disclose how many employees will depart. Tuesday's board shakeup indicates even more major changes are afoot.

Reuters notes that Jana Partners' stake in Tiffany only recently came to light, and while the $6 billion hedge fund's endgame is uncertain, some analysts believe Jana may view the jeweler as a takeover prospect. Tiffany also said Tuesday it will limit waivers in its retirement age provisions for board members, where one board member will relinquish a seat this year and two board members will do so next year.