Tiffany & Co. returned to profitability in the summer quarter, giving investors hope that its proposed sale to LVMH for US$16 billion might still have legs.

The jeweler, which saw sales pick up each month between May and July, reported global net sales down 29 per cent in the quarter ended July 31, a marked improvement from the 45 per cent drop reported the previous period. Adjusted earnings per share for the second quarter beat the average analyst estimate.

While Tiffany’s double-digit sales drop shows much of the economic pain from the pandemic lingers, the dark days might be behind the retailer. Tiffany’s jewelry business tanked in the early stages of the lockdowns, raising concerns that proposed buyer LVMH Moet Hennessy Louis Vuitton SE might no longer want a foothold into the U.S. market. Those fears were fueled earlier this week when LVMH said it reserved the right to challenge a later deal deadline -- a sign some saw as the French conglomerate keeping its options open.

Tiffany shares rose 1.7 per cent at 9:34 a.m. in New York.

Recovering sales in mainland China, a key market for the jeweler, helped stem the declines. Tiffany also saw new traction on its digital platforms -- traditionally not the marketplace for big-ticket items buyers want to see in person. Globally, its e-commerce business was up 123 per cent during the second quarter. This puts e-commerce sales at about 15 per cent of total net sales for the first half of the year, well above the 6 per cent share recorded in each of the last three years.

--With assistance from Karen Lin.