Chinese tourists are spending less at Tiffany’s. That’s a worrying sign

Chinese tourists in the United States slowed their spending at Tiffany during its most recent quarter, a troubling sign for the jeweler.

Tiffany’s (TIF) stock tumbled 11% on Wednesday, falling near a low on the year.

The US based jeweler counts on Chinese shoppers, who make up about a third of the $21 billion luxury goods market.

Tiffany, which has about $4.2 billion in annual sales, warned in a securities filing this year that “any slowdown in the Chinese economy could have a negative impact on the sales and profitability of stores.”

Chinese tourists are especially important to Tiffany. Executives said that the majority of its Chinese customers – about two-thirds – make their purchases abroad.

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But the Chinese economy has weakened lately— in part from the trade war between Beijing and Washington. That’s led to fewer Chinese shoppers making trips abroad, according to China’s state-run newspaper.

Travelers might also be spending less on US luxury goods because the resale market in China is becoming less lucrative, saidNeil Saunders, managing director at GlobalData Retail.

He said the Chinese government has recently strengthened its customs enforcement to crackdown on resellers who bring expensive goods into China and sell them for less than US stores.

Saunders also noted that the dollar has strengthened against the Yuan, which makes US products more expensive for Chinese consumers.

The Chinese economy hasn’t faltered enough to prevent spending in China, however. Sales grew in mainland China last quarter, and Tiffany executives told analysts on Wednesday that they expect a rebound in Chinese tourist spending.

“We can speculate on the reasons for the tourist spend down outside of China, but the reality is that the Tiffany brand is appealing to Chinese customers,” chief executive Alessandro Bogliolo said.

Investors were disappointed by other areas of Tiffany’s earnings report, too. Higher spending on marketing, tech, and digital investments drove down the company’s profit. Investors also hoped for a stronger holiday sales forecast.

Despite the disappointing quarter, Tiffany’s attempts to appeal to younger consumers appear to be working. Tiffany has partnered with celebrity endorsers such as Elle Fanning, A$AP Ferg, Maddie Ziegler, and Kendall Jenner to boost its image.

Saunders pointed to consumer tracking surveys, which show Tiffany has become more relevant with Millennials in recent years.

CNN Business’ Danielle Wiener-Bronner contributed to this story.