Item 5. Other Events.
On May 16, 2001, Registrant issued the following press release
announcing its sales and earnings for the three-month period ended April 30,
2001:
NEW YORK, May 16, 2001 - Tiffany & Co. (NYSE-TIF) reported that its net sales
declined 3 percent and net earnings rose 1 percent in the three months ended
April 30, 2001. U.S. Retail sales results suffered from generally weak consumer
confidence and a tough comparison to 2000's first quarter when U.S. comparable
store sales grew 28 percent.
Net sales of $336,401,000 in the first quarter were 3 percent lower than a year
ago. On a constant-exchange-rate basis which excludes the effect of translating
local-currency-denominated sales into U.S. dollars, net sales rose 2 percent
over 2000 and worldwide comparable store sales declined 2 percent. Net earnings
in the first quarter rose 1 percent to $30,762,000, or 20 cents per diluted
share, compared with $30,425,000, or 20 cents per diluted share, in 2000's first
quarter.
Michael J. Kowalski, president and chief executive officer, said, "These results
are not consistent with the strong growth that Tiffany has achieved for a number
of years, including an 88 percent net earnings increase in 2000's first quarter.
However, they were, not surprisingly, impacted by external conditions that
affected customers' average spending levels and that are in sharp contrast to
the robust retail environment of a year ago."
Sales in Tiffany's three channels of distribution were as follows:
o U.S. Retail sales of $159,012,000 in the first quarter were 6 percent lower
than $169,767,000 a year ago. Comparable store sales declined 8 percent,
after increasing 28 percent in the first quarter of 2000. Comparable store
sales in the first quarter declined 15 percent in Tiffany's flagship New
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York store and 6 percent in branch stores. New stores opened in the past
year performed well.
o International Retail sales of $146,423,000 in the first quarter declined 1
percent from $147,446,000 a year ago. On a constant-exchange-rate-basis,
International Retail sales rose 9 percent, and comparable store sales rose
6 percent in Japan, 2 percent in other Asia-Pacific markets and 13 percent
in Europe.
o Direct Marketing sales rose 11 percent to $30,966,000 in the first quarter,
compared with $27,930,000 in the prior year. Corporate sales rose 8 percent
and catalog/Internet sales increased 15 percent.
Results in the first quarter of 2001 included: a pretax gain of $5,253,000
recorded in Other (income) expense, net ($3,152,000, net of tax), based on
Tiffany's equity interest in Aber Diamond Corporation, which sold its interest
in the Snap Lake Project to De Beers Canada Mining, Inc. in February 2001; and a
pretax charge of $1,653,000 recorded in Cost of sales ($992,000, net of tax),
related to the Company's adoption of Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities."
Excluding these two items, net earnings in the first quarter of 2001 would have
been $28,602,000, or 19 cents per diluted share.
Mr. Kowalski added, "We were pleased that, despite the sales shortfall, we
minimized the impact on operating margin through a combination of strong gross
margin and expense control. We are only two weeks into the second quarter and
initial U.S. comparable store sales have improved slightly from the first
quarter, but remain below the prior year. Our outlook continues to call for
challenging external conditions in the coming months and we will continue to
face a tough comparison to last year. Therefore, we believe that net earnings in
the second quarter could approach last year's level, which would fall within the
published range of security analysts' estimates, assuming that U.S. comparable
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store sales for the quarter are at least equal to the prior year. Our plan
continues to call for mid-to-high single-digit U.S. comparable store sales
growth in the second half of the year, which would result in a return to strong
earnings growth."
"Most importantly, Tiffany remains in a very strong position, both competitively
and financially, and we will continue to expand distribution and further invest
in the supporting infrastructure. We will exercise rigorous control over
expenses, but we will not permit short-term considerations to dampen our
enthusiasm about plans for 2001 and beyond," Mr. Kowalski concluded.
Tiffany & Co. is the internationally renowned jeweler and specialty retailer.
Sales are made primarily through TIFFANY & CO. stores and boutiques in the
Americas, Asia-Pacific, Europe and the Middle East. Direct Marketing includes
Tiffany's corporate division, catalog and Internet sales. Additional information
can be found on Tiffany's Web site, www.tiffany.com, and on its shareholder
information line (800) TIF-0110.
The Company will host a conference call today at 8:30 a.m. (EST) to review first
quarter results and the outlook. Interested parties may listen to a broadcast on
the Internet at www.shareholder.com/tiffany, www.vcall.com or
www.streetevents.com.
This press release contains certain "forward-looking" statements concerning
expectations for sales, margins and earnings. Actual results might differ
materially from those projected in the forward-looking statements. Information
concerning factors that could cause actual results to differ materially are set
forth in Tiffany's 2000 Annual Report and in Form 10-K, 10-Q and 8-K Reports
filed with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any forward-looking statements to reflect
subsequent events or circumstances.
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