Exhibit 99.1
TIFFANY & CO.
NEWS RELEASE
Fifth Avenue & 57th Street Contacts:
New York, N.Y. 10022 ---------
James N. Fernandez
(212)230-5315
Mark L. Aaron
(212)230-5301
TIFFANY'S FIRST QUARTER SALES UP 15%; EARNINGS UP 12%;
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COMPARABLE U.S. STORE SALES RISE 20%;
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COMPANY PROVIDES BUSINESS OUTLOOK
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New York, May 13, 2004 - Tiffany & Co. (NYSE-TIF) announced today that net sales
in its first quarter ended April 30, 2004 increased 15% to $456,960,000, driven
by strong growth in the U.S., as well as in most international markets. On a
constant-exchange-rate basis that excludes the effect of translating
local-currency-denominated sales into U.S. dollars, worldwide net sales rose 11%
and comparable store sales rose 9%.
Net earnings in the quarter increased 12% to $40,308,000, or 27 cents per
diluted share, compared with $35,863,000, or 24 cents per diluted share, in the
prior year.
Michael J. Kowalski, chairman and chief executive officer, said, "Total sales
and earnings growth in the first quarter exceeded our expectations thanks to
exceptionally strong U.S. results. We are very encouraged with the way we have
begun 2004."
Sales performance in Tiffany's channels of distribution was as follows:
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o U.S. Retail sales increased 23% in the first quarter to $213,662,000.
Comparable store sales rose 20% due to a 30% increase in Tiffany's New
York flagship store and 17% growth in branch store sales. The average
amount spent per transaction increased. In addition, comparable store
growth was broadly generated by increased sales to local-resident
customers as well as to domestic and foreign tourists. At the end of
the quarter, the Company operated 51 TIFFANY & CO. stores in the U.S.
o International Retail sales rose 12% to $184,731,000 in the first
quarter. On a constant-exchange-rate basis, International Retail sales
rose 2% and comparable store sales declined 2%. On that basis,
comparable store sales declined 10% (and
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total sales declined 9%) in Japan, rose 26% in other Asia-Pacific
markets and rose 7% in Europe. During the quarter, the Company opened
a store on Sloane Street, its fourth in London, and in Japan opened
a retail boutique in Wakayama and closed one in Nagano. At the end
of the quarter, the Company operated 91 TIFFANY & CO. stores in
international markets.
o Direct Marketing sales declined 1% in the first quarter to
$36,899,000. A combined 15% increase in e-commerce and catalog sales
resulted from an increase in the average order size and higher
e-commerce orders. However, business sales declined 24%, as expected,
due to the year-over-year effect of the Company's strategic decision
to discontinue service award program sales during 2003.
o Specialty Retail sales increased 11% to $21,668,000 in the first
quarter primarily due to sales growth in LITTLE SWITZERLAND stores.
Other Financial Highlights:
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o Gross margin (gross profit as a percentage of net sales) was 56.8% in
the first quarter versus 58.0% in the prior year. As expected, the
decline primarily reflected a LIFO inventory charge of $3,600,000
(versus $600,000 a year ago) to reflect higher precious metal costs,
as well as incremental costs related to the opening of an additional
distribution center in the third quarter of 2003.
o Selling, general and administrative expenses ("SG&A") increased 12% in
the first quarter. The ratio of SG&A as a percentage of net sales
improved to 41.9% versus 43.1% a year ago.
o The Company's financial position remained strong at April 30, 2004:
- Net-debt leverage was 18% at April 30 versus 16% a year ago.
- Net inventories at April 30 were 26% higher than a year ago
primarily reflecting higher raw material and work-in-process
levels to support expanded internal manufacturing and
rough-diamond sourcing and, to a lesser extent, higher
finished goods levels for new stores and new products and
the translation effect of a weaker U.S. dollar against most
currencies.
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- In the first quarter, the Company repurchased and retired
110,000 shares of its Common Stock at an average cost of
$37.54 per share. Approximately $112 million remains
available for future repurchases under its currently
authorized plan.
Outlook:
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Mr. Kowalski said, "After concluding 2003 on a healthy note in most areas of our
business, we are pleased to be sustaining that strength in the U.S. and most
international markets. Japan is the one notable exception due to continued
weakness in the silver jewelry category. We believe that conditions in most of
Tiffany's markets are favorable to support continued healthy rates of sales and
earnings growth, supported by our ongoing initiatives in merchandising and
marketing. Although Japan's results were disappointing, we have focused on
product assortment repositioning and new product introductions and believe that
incremental marketing initiatives will enhance overall customer awareness and
lead to gradually improving sales and profitability."
He added, "Therefore, our global assessment leads us to believe we can achieve
full year expectations that call for at least 11% growth in net sales and at
least 12% growth in net earnings. In the U.S., we continue to expect
high-single-digit comparable store sales growth in the second quarter and
mid-single-digit growth in the second half due to more difficult year-over-year
comparisons. We anticipate business to gradually improve in Japan but to not
achieve comparable store sales growth until the second half. We expect to
increase worldwide retail square footage of TIFFANY & CO. stores by at least 5%
in 2004, consistent with our long-term objective, including the opening of four
new locations in the U.S., two in Japan and at least three in other key
international markets."
"We continue to expect minimal improvement in gross margin for the year,
although an expected decline in the second quarter will reflect costs, not yet
annualized, from the new distribution center. For the full year, we also
continue to anticipate a low double-digit percentage increase in SG&A and an
improved ratio of SG&A as a percentage of net sales. Therefore, we continue to
expect at least a 12% increase in net earnings for 2004 which, combined with a
modest increase in average shares outstanding, would lead to earnings per
diluted share of at least $1.60. Tiffany's ongoing success has and will continue
to reflect the distinctive and enduring appeal of its extraordinary products
which, supported by proven strategies and a well-developed infrastructure, can
result in healthy long-term growth," Mr. Kowalski concluded.
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The Company will host a conference call today at 8:30 a.m. (EST) to review these
results and its outlook. Interested parties may listen to a broadcast on the
Internet at www.tiffany.com (click on "About Tiffany," "Shareholder
Information," "Conference Call") and at www.streetevents.com.
Tiffany & Co. is the internationally renowned jeweler and specialty retailer.
Sales are made primarily through company-operated TIFFANY & CO. stores and
boutiques in the Americas, Asia-Pacific and Europe. Direct Marketing includes
Tiffany's Business Sales division, Internet and catalog sales. Specialty Retail
primarily includes the retail sales made in LITTLE SWITZERLAND stores and also
includes consolidated results from other ventures now operated or to be operated
under non-TIFFANY & CO. trademarks or trade names. Additional information can be
found on Tiffany's Web site, www.tiffany.com, and on its shareholder information
line 800-TIF-0110.
Investors and analysts should note that the Company anticipates reporting its
second quarter results on August 12, 2004 and conducting a conference call at
8:30 a.m. (EST) that day, to be broadcast at www.tiffany.com and
www.streetevents.com. To receive future notifications for conference calls
and/or news release alerts, interested parties may register at www.tiffany.com
(click on "About Tiffany," "Shareholder Information," "Calendar of Events" and
"News by E-Mail").
This press release contains certain "forward-looking" statements concerning
expectations for sales, store openings, gross margins, expenses 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 2003 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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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share amounts)
Three Months
Ended April 30,
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2004 2003
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Net sales $ 456,960 $ 395,839
Cost of sales 197,294 166,195
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Gross profit 259,666 229,644
Selling, general and administrative expenses 191,330 170,675
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Earnings from operations 68,336 58,969
Other expenses, net 3,324 2,313
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Earnings before income taxes 65,012 56,656
Provision for income taxes 24,704 20,793
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Net earnings $ 40,308 $ 35,863
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Net earnings per share:
Basic $ 0.27 $ 0.25
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Diluted $ 0.27 $ 0.24
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Weighted-average number of common shares:
Basic 146,815 144,894
Diluted 149,481 147,438
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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
April 30, January 31, April 30,
2004 2004 2003
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ASSETS
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Current assets:
Cash and cash equivalents $ 190,793 $ 276,115 $ 123,449
Accounts receivable, net 115,512 131,990 107,105
Inventories, net 964,954 871,251 765,780
Deferred income taxes 46,415 45,043 44,836
Prepaid expenses and other current assets 40,410 23,683 35,451
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Total current assets 1,358,084 1,348,082 1,076,621
Property, plant and equipment, net 879,105 885,092 688,092
Deferred income taxes - - 7,208
Other assets, net 180,360 157,914 172,045
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$ 2,417,549 $ 2,391,088 $ 1,943,966
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Short-term borrowings $ 95,842 $ 41,948 $ 57,346
Current portion of long-term debt 49,973 51,920 -
Accounts payable and accrued liabilities 185,594 209,842 156,829
Income taxes payable 26,480 45,922 27,639
Merchandise and other customer credits 46,413 45,527 42,939
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Total current liabilities 404,302 395,159 284,753
Long-term debt 382,883 392,991 298,419
Postretirement/employment benefit obligations 37,287 36,746 34,345
Deferred income taxes 18,516 22,397 -
Other long-term liabilities 79,756 75,595 89,211
Stockholders' equity 1,494,805 1,468,200 1,237,238
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$ 2,417,549 $ 2,391,088 $ 1,943,966
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