Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

I don't envy Alessandro Bogliolo, the incoming chief executive of Tiffany & Co., and the luxe jeweler's quarterly earnings report on Thursday helped demonstrate why.

Yes, the company improved its profitability in the quarter, which seemed to cheer investors. But Tiffany's same-store sales were down 2 percent compared to the same quarter a year earlier, the seventh consecutive period in which the company was flat or down on this measure. That's bad enough, but Bogliolo's real problem is bigger than a string of disappointing sales results: It's that everywhere he turns, there are serious hurdles to turning things around.

First, he faces challenges from inside the Blue Box. Tiffany desperately needs stronger product innovation. It's tried all sorts of ideas in recent years: The company hired Lady Gaga to pitch its HardWear collection, a new line that's meant to show an edgier and more subversive side of the classic brand. It has moved to grow its wristwatch business to make up for trouble in the jewelry business.

But the still weak same-store sales tell us that these haven't done enough to move the needle.

In a Rut
Tiffany has struggled to deliver same-store sales growth
Source: Company Filings

It's true that Bogliolo has Reed Krakoff, the company's relatively new chief artistic officer, working on its merchandise problems. But Krakoff's luxury credentials don't include much experience with jewelry, and he's managing a team of designers and marketers who obviously have struggled to get customers to spring for bling.

Meanwhile, the board of directors at Tiffany hasn't shown itself to have much patience. The previous CEO, Frederic Cumenal, was axed after less than two years on the job. Activist investor Jana Partners pushed Tiffany to install three new board members subsequent to Cumenal's ouster, but it stands to reason they are also going to be clamoring for speedy results.

And while some other big names in the luxury world -- LVMH and Kering -- have gotten a lift lately from broad consumer-spending trends, Tiffany isn't as well-positioned to ride the same tailwind.

Bling, Bling
During the latest fiscal year, Tiffany drew close to half of its sales from its Americas division
Source: Company Filings

America is still Tiffany's largest market, and spending on luxury goods in this market is expected to be stagnant or down for the full year, even as it strengthens significantly in overseas markets. Researchers at consultancy Bain & Co. project that spending on luxury goods will grow by 6 percent to 8 percent this year in China and 7 percent to 9 percent in Europe. 

The dollar has weakened somewhat since the beginning of this year, but it is still strong enough to keep some international tourists from plunking down big bucks stateside. (Macy's Inc. has also been challenged by this, saying that international tourist spending was down 9 percent in the latest quarter and created a significant drag on comparable sales.)

Meanwhile, the luxury market is finally racing toward a digital future, catching up with a reality that had long ago been embraced by businesses and shoppers at lower price points. But the kind of sentimental purchases that Tiffany specializes in -- engagement rings, future family heirlooms -- might not lend themselves as well to the digital experience.

Luxury Goes Digital
The online channel is set to account for a much larger share of the total luxury goods market by 2025
Source: Bain & Co., Altagamma

We don't quite know yet what Bogliolo's plans are to shine up Tiffany's diamonds. But what's clear is that he is largely going to be responsible for his own success, because he's not going to get much help elsewhere.      

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Sarah Halzack in Washington at

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