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 REPORTS THIRD QUARTER RESULTS
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New York, N.Y., November 30, 2005 - Tiffany & Co. (NYSE: TIF) today reported
increases of 8% in net sales and 37% in net earnings for its third quarter ended
October 31, 2005. Earnings growth benefited from a 5% increase in worldwide
comparable store sales, a higher gross margin and a lower effective tax rate.
Net earnings in the three months (third quarter) ended October 31, 2005 rose 37%
to $23,789,000, or $0.16 per diluted share, versus $17,358,000, or $0.12 per
diluted share, in the prior year. For the nine-month period ended October 31,
2005, net earnings increased 31% to $114,398,000, or $0.79 per diluted share,
compared with $87,259,000, or $0.59 per diluted share.
Net sales in the third quarter increased 8% to $500,105,000, versus $461,152,000
in the prior year. Net sales for the nine-month period rose 10% to
$1,536,707,000, compared with $1,394,709,000 a year ago. On a
constant-exchange-rate basis that excludes currency effects from translating
foreign-denominated sales into U.S. dollars, net sales increased 9% in the third
quarter and 10% in the nine-month period, with worldwide comparable store sales
increasing 5% and 4% (see attached Non-GAAP Measures).
Sales in the Company's channels of distribution were as follows:
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o U.S. Retail sales increased 9% to $247,782,000 in the third quarter;
comparable store sales rose 7% due to growth of 12% in New York
flagship store sales and 6% in branch store sales. In the nine-month
period, U.S. Retail sales rose 10% to $771,344,000; comparable store
sales rose 8% with equivalent growth in both the New York store and
branch stores. Tiffany opened a store in San Antonio, Texas in the
quarter and operated 57 TIFFANY & CO. stores in the U.S. at the end of
the quarter.
o International Retail sales increased 7% to $204,287,000 in the third
quarter and 7% to $596,707,000 in the nine-month period. On a
constant-exchange-rate basis,
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sales rose 7% in the third quarter and 6% in the nine-month period and
comparable store sales increased 1% in the quarter and declined 1% in
the nine-month period. On that same basis, comparable store sales in
Japan in the quarter were equal to the prior year and declined 3% in
the nine-month period; increased 4% and 5% in the Asia-Pacific region
outside Japan; and declined 1% and rose 1% in Europe. Total retail
sales in Japan rose 5% in the third quarter and 2% in the nine-month
period, which reflects the opening of two retail locations in the
quarter (Yokohama and Osaka) and the closing of five older locations
this year. The Company currently operates 95 TIFFANY & CO.
international stores and boutiques.
o Direct Marketing sales increased 4% to $27,308,000 in the third
quarter and 7% to $86,598,000 in the nine-month period due to
increased average amounts spent for Internet and catalog orders.
o Other sales increased 22% to $20,728,000 in the third quarter and 43%
to $82,058,000 in the nine-month period. More than half of the
increase in both periods was due to wholesale sales of diamonds. In
addition, sales increased 10% and 12% in the Company's LITTLE
SWITZERLAND stores. The Company's IRIDESSE stores, which commenced
operations in late-2004 and which focus exclusively on the pearl
jewelry category, added to sales growth.
Michael J. Kowalski, Tiffany's chairman and chief executive officer, said, "We
were pleased to see continued comparable store sales strength in the U.S. and
progress in Japan. Tiffany's extraordinary product offerings, including new
jewelry designs which complement our core designs, ensure that we are
competitively well-positioned."
Other Financial Highlights:
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o Gross margin (gross profit as a percentage of net sales) was 54.1% in
the third quarter (versus 53.2% in the prior year) and 54.5% in the
nine-month period (versus 55.1%). These results were due to a variety
of factors, including changes in geographic/product sales mix and
product costs, as well as wholesale sales of diamonds which earn a
minimal or no gross margin. The Company recorded LIFO inventory
charges of $4,178,000 in the third quarter and $8,347,000 in the nine
months, compared with $8,682,000 and $17,708,000 in the prior year.
o Selling, general and administrative ("SG&A") expenses rose 9% in the
third quarter and 7% in the nine-month period. The Company recorded a
charge of $4,316,000 (or $0.02 per diluted share after tax) in the
third quarter as a result of
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the sale of a glassware manufacturing facility and the sale of
Tiffany's equity interest in a specialty retailer. The ratio of SG&A
expenses as a percentage of net sales was 46.1% in the third quarter
(versus 46.0% a year ago) and 42.8% in the nine months (versus 44.1% a
year ago), and reflect the underlying leverage effect of sales growth
on fixed SG&A expenses.
o Earnings from operations rose 19% in the third quarter and 17% in the
nine-month period and, as a percentage of net sales, was 8.0% in the
third quarter (versus 7.2% in the prior year) and 11.7% in the
nine-month period (versus 11.0% in the prior year).
o The effective tax rate was 33.0% in the third quarter and 31.8% in the
nine-month period, versus 38.2% and 38.0% in the prior year. The
decrease in the third quarter was due to favorable reserve adjustments
relating to the expiration of certain statutory periods during the
quarter. In addition, the lower rate in the nine-month period was due
to tax benefits of $8,100,000, or $0.06 per diluted share, related to
the repatriation provisions of the American Jobs Creation Act of 2004.
o Net inventories at October 31, 2005 were 2% lower than a year ago.
Finished goods inventories declined 1%. Combined raw material and
work-in-process inventories declined 6% due to the timing in 2004 of
internal jewelry manufacturing and rough diamond sourcing.
o The Company repurchased and retired 790,997 shares of its Common Stock
in the third quarter at an average cost of $38.42 per share, and
repurchased and retired 3,366,309 shares of its Common Stock in the
nine-month period at an average cost of $33.97 per share.
Approximately $295 million remains available for future repurchases
under the authorized plan.
o The Company's strong balance sheet at October 31, 2005 included cash
and cash equivalents of $111,586,000 (versus $129,776,000 at October
31, 2004) and stockholders' equity of $1,692,647,000 (versus
$1,516,334,000). Total debt declined to $403,971,000 from
$660,583,000, and, as a percentage of stockholders' equity, declined
to 24% from 44% a year ago.
Mr. Kowalski added, "Based on these results and our expectations for customer
demand during the Holiday selling season, we are maintaining our
previously-published expectations for full year 2005 net sales growth of 8-10%
and net earnings in a range of $1.55-$1.65 per diluted share."
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Today's Conference Call
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The Company will conduct a conference call today at 8:30 a.m. (EST) to review
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.
Next Scheduled Announcement
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The Company anticipates reporting its holiday sales results on January 10, 2006
with a conference call at 8:30 a.m. (EST) that day, to be broadcast at
www.tiffany.com and www.streetevents.com. To receive notifications for
conference calls and/or news release alerts, please register at www.tiffany.com
(click on "About Tiffany," "Shareholder Information," "Calendar of Events" and
"News by E-Mail").
Company Description
- -------------------
Tiffany & Co. operates jewelry and specialty retail stores and manufactures
products through its subsidiary corporations. Its principal subsidiary is
Tiffany and Company. The Company operates TIFFANY & CO. retail stores and
boutiques in the Americas, Asia-Pacific and Europe and engages in direct selling
through Internet, catalog and business gift operations. Other operations include
consolidated results from ventures operated under trademarks or trade names
other than TIFFANY & CO. For additional information, please visit
www.tiffany.com or call our shareholder information line at 800-TIF-0110.
This document contains certain "forward-looking" statements concerning the
Company's objectives and expectations with respect to sales, store openings,
gross margins, expenses, earnings and inventories. Actual results might differ
materially from those projected in the forward-looking statements. Information
concerning risk factors that could cause actual results to differ materially is
set forth in the Company's 2004 Annual Report and in Forms 10-K, 10-Q and 8-K
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 Nine Months
Ended October 31, Ended October 31,
------------------------------------- -------------------------------------
2005 2004 2005 2004
-------------- --------------- -------------- --------------
Net sales $ 500,105 $ 461,152 $ 1,536,707 $ 1,394,709
Cost of sales 229,575 215,624 699,272 625,817
-------------- --------------- -------------- --------------
Gross profit 270,530 245,528 837,435 768,892
Selling, general and administrative expenses 230,735 212,164 657,261 614,663
-------------- --------------- -------------- --------------
Earnings from operations 39,795 33,364 180,174 154,229
Other expenses, net 4,289 5,276 12,353 13,398
-------------- --------------- -------------- --------------
Earnings before income taxes 35,506 28,088 167,821 140,831
Provision for income taxes 11,717 10,730 53,423 53,572
-------------- --------------- -------------- --------------
Net earnings $ 23,789 $ 17,358 $ 114,398 $ 87,259
============== =============== ============== ==============
Net earnings per share:
Basic $ 0.17 $ 0.12 $ 0.80 $ 0.60
============== =============== ============== ==============
Diluted $ 0.16 $ 0.12 $ 0.79 $ 0.59
============== =============== ============== ==============
Weighted-average number of common shares:
Basic 142,280 145,943 143,172 146,376
Diluted 144,993 147,735 145,472 148,546
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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
October 31, January 31, October 31,
2005 2005 2004
------------------ ------------------ ------------------
ASSETS
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Current assets:
Cash and cash equivalents $ 111,586 $ 187,681 $ 129,776
Short-term investments - 139,200 -
Accounts receivable, net 129,454 133,545 124,080
Inventories, net 1,104,326 1,057,245 1,130,767
Deferred income taxes 74,544 64,790 57,814
Prepaid expenses and other current assets 73,801 25,428 43,613
-------------- -------------- --------------
Total current assets 1,493,711 1,607,889 1,486,050
Property, plant and equipment, net 860,712 917,853 917,837
Other assets, net 145,523 140,376 188,860
-------------- -------------- --------------
$ 2,499,946 $ 2,666,118 $ 2,592,747
============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Short-term borrowings $ 30,365 $ 42,957 $ 267,389
Accounts payable and accrued liabilities 182,831 186,013 193,458
Income taxes payable 15,460 118,536 12,619
Merchandise and other customer credits 54,238 52,315 50,230
-------------- -------------- --------------
Total current liabilities 282,894 399,821 523,696
Long-term debt 373,606 397,606 393,194
Postretirement/employment benefit obligations 41,106 40,220 39,639
Deferred income taxes - 33,175 26,256
Other long-term liabilities 109,693 94,136 93,628
Stockholders' equity 1,692,647 1,701,160 1,516,334
-------------- -------------- --------------
$ 2,499,946 $ 2,666,118 $ 2,592,747
============== ============== ==============
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TIFFANY & CO. AND SUBSIDIARIES
(Unaudited)
NON-GAAP MEASURES
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The Company reports information in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP"). Internally, management monitors the sales
performance of its international stores and boutiques on a non-GAAP basis that
eliminates the positive or negative effects that result from translating
international sales into U.S. dollars (constant-exchange-rate basis). Management
uses this constant-exchange-rate measure because it believes it is a more
representative assessment of the sales performance of its international stores
and boutiques and provides better comparability between reporting periods.
The Company's management does not, nor does it suggest that investors should,
consider such non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP. The Company
presents such non-GAAP financial measures in reporting its financial results to
provide investors with an additional tool to evaluate the Company's operating
results.
The following table reconciles net sales percentage increases (decreases) from
the GAAP to the non-GAAP basis:
Three Months Ended Nine Months Ended
October 31, 2005 October 31, 2005
-------------------------------------------- ------------------------------------------
Trans- Constant- Trans- Constant-
GAAP lation Exchange- GAAP lation Exchange-
Reported Effect Rate Basis Reported Effect Rate Basis
-------------------------------------------- ------------------------------------------
Net Sales:
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Worldwide 8% (1%) 9% 10% - 10%
U.S. Retail 9% - 9% 10% - 10%
International
Retail 7% - 7% 7% 1% 6%
Japan 3% (2%) 5% 2% - 2%
Other Asia-
Pacific 17% 4% 13% 20% 5% 15%
Europe 6% (1%) 7% 9% 1% 8%
Comparable Store Sales:
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Worldwide 5% - 5% 5% 1% 4%
U.S. Retail 7% - 7% 8% - 8%
International
Retail 1% - 1% 1% 2% (1%)
Japan (2%) (2%) - (3%) - (3%)
Other Asia-
Pacific 8% 4% 4% 9% 4% 5%
Europe (2%) (1%) (1)% 2% 1% 1%
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