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 NET SALES AND E.P.S. GROWTH
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IN ITS FOURTH QUARTER AND 2006 FULL YEAR
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New York, N.Y., March 26, 2007 - Tiffany & Co. (NYSE: TIF) today reported
results for its fourth quarter and fiscal year ended January 31, 2007.
Net sales in the fiscal year rose 11%, due to geographically broad-based growth
in the U.S. and international markets. Earnings from operations rose 9% and net
earnings were $1.80 per diluted share.
In the fourth quarter, net sales increased 15% to $986,354,000. On a
constant-exchange-rate basis which excludes the effect of translating
foreign-currency-denominated sales into U.S. dollars (see attached "Non-GAAP
Measures" schedule), net sales rose 14% and worldwide comparable store sales
rose 8%.
Net earnings of $140,499,000 in the fourth quarter were approximately equal to
2005. Net earnings per diluted share increased to $1.02 from $0.97 due to fewer
shares outstanding. Net earnings in the quarter and fiscal year included an
impairment charge of $0.05 per diluted share related to Little Switzerland Inc.
Earnings before income taxes increased 11%. Net earnings in the fourth quarter
of 2005 included a tax benefit of $0.10 per diluted share tied to the
repatriation provisions of the American Jobs Creation Act of 2004 ("AJCA").
In fiscal 2006, net sales rose 11% to $2,648,321,000. On a
constant-exchange-rate basis net sales increased 11% and worldwide comparable
store sales rose 6%.
Net earnings of $253,927,000 in fiscal 2006 were approximately equal to 2005.
Net earnings per diluted share rose to $1.80 from $1.75 due to fewer shares
outstanding.
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Earnings before income taxes rose 10% in the fiscal year. 2005 included a tax
benefit of $0.16 per diluted share related to the AJCA.
Michael J. Kowalski, chairman and chief executive officer, said, "Tiffany
continued to pursue important strategic initiatives in 2006 and achieved the
earnings per share expectation we set at the start of the year. We were
especially encouraged with customers' response to our new stores and to the wide
range of new products we introduced in 2006."
Sales by channel of distribution were as follows:
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o U.S. Retail sales increased 13% to $506,932,000 in the fourth quarter
and 9% to $1,326,441,000 in the year. Sales benefited from increased
spending per transaction and an increase in total store transactions.
Comparable store sales increased 9% in the fourth quarter and 5% in
the year due to increases of 17% and 9% in the New York flagship store
and 8% and 4% in comparable branch stores. In addition, the five new
U.S. stores opened in 2006 meaningfully contributed to sales growth.
o International Retail sales increased 15% to $350,629,000 in the fourth
quarter and 12% to $1,010,627,000 in the year. On a
constant-exchange-rate basis, sales increased 12% in the quarter and
13% in the year; on that same basis, comparable store sales increased
6% and 8%. In both the quarter and the year, strong sales growth in
most international markets more than offset weaker results in Japan.
Detailed sales results by geographical region are noted on the
attached "Non-GAAP Measures" schedule. Tiffany increased by eight the
number of Company-operated international locations in 2006.
o At the end of fiscal 2006, the Company operated 167 TIFFANY & CO.
stores and boutiques (an 8% increase from 154 at the prior year-end),
which included 64 stores in the U.S. and 103 international locations.
o Direct Marketing sales increased 10% to $78,071,000 in the fourth
quarter and 11% to $174,078,000 in the year due to strong growth in
Internet sales. Direct Marketing sales growth came from increases in
the number of orders and in the amounts spent per order.
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o Other sales rose 48% to $50,722,000 in the fourth quarter and 18% to
$137,175,000 in the fiscal year. In both periods, the increases were
largely due to wholesale sales of diamonds. Specialty retail sales
also increased: sales in LITTLE SWITZERLAND stores (which represent
the largest portion of Other sales) rose 11% in the quarter and 6% in
the year, while sales increases in IRIDESSE stores resulted from a
doubling of locations in 2006, as well as from comparable store sales
growth.
Other financial highlights were as follows:
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o Gross margin (gross profit as a percentage of net sales) was 57.2% in
the fourth quarter and 55.7% in the fiscal year versus 58.8% and 56.0%
in the respective prior-year periods. These decreases resulted from
increased wholesale sales of diamonds, higher product costs and
changes in sales mix, partly offset by sales leverage on fixed costs.
Included in the higher product costs were LIFO inventory charges of
$12,966,000 in the quarter and $32,877,000 in the year, compared with
$3,219,000 and $11,566,000 in 2005.
o Selling, general and administrative ("SG&A") expenses increased 12% in
the fourth quarter and 10% in the fiscal year, largely due to higher
store and marketing-related costs. In addition, the Company recorded a
pretax charge of $6,893,000 (or $0.05 per diluted share) in the fourth
quarter related to the impairment of total goodwill associated Little
Switzerland Inc. As a percentage of net sales, SG&A expenses were
34.4% in the quarter and 40.0% in the year, compared with 35.2% and
40.1% in 2005.
o Other expenses, net in the fiscal year decreased from 2005. In the
third quarter of 2006, the Company recorded income of $5,185,000
associated with the sale of equity investments in an on-line retailer
and a manufacturer (both of which had been written-off in previous
years) and a gain of $1,589,000 on the disposition of marketable
securities.
o The effective tax rates increased to 36.6% in the fourth quarter and
37.2% in the fiscal year compared with 29.9% and 30.8% in 2005. 2005
included AJCA tax benefits of $14,488,000 in the fourth quarter and
$22,588,000 in the year.
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o Net inventories increased 15% in 2006 due to new store openings,
broadened product assortments, higher precious metal costs and
expanded diamond sourcing operations.
o Capital expenditures were $182,393,000 in fiscal 2006, or 6.9% of net
sales, versus $157,036,000, or 6.6% of net sales, in the prior year.
o The Company repurchased and retired 436,435 shares of its Common Stock
in the fourth quarter at a total cost of $17,061,000, or an average
cost of $39.09 per share. Over the full year, the Company repurchased
and retired 8,149,042 shares at a total cost of $281,176,000, or an
average cost of $34.50 per share. Approximately $695 million remains
available for repurchases through December 2009 under the currently
authorized program.
o Total debt as a percentage of stockholders' equity at January 31, 2007
increased to 29% from 26% at the prior year-end. This reflects the
effects from share repurchases and higher inventory levels.
2007 Outlook
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Mr. Kowalski said, "We concluded 2006 with strong sales growth, giving us every
reason to believe that Tiffany remains well-positioned to achieve solid sales
and earnings growth in 2007 and beyond. Our objectives for 2007 include: net
sales growth of 11-12%; a high-single-digit percentage increase in U.S. and
international comparable store sales (on a constant-exchange-rate basis);
accelerating the pace of new store openings - we expect to add 17
Company-operated TIFFANY & CO. stores and boutiques in 2007, a 10% increase; a
one-half point increase in operating margin largely through a higher gross
margin; other expenses, net of approximately $21-23 million; an effective tax
rate of approximately 38%; increasing earnings per diluted share by 15%; a
high-single-digit percentage increase in net inventories; and capital
expenditures of approximately $180 million."
First Quarter Update:
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"We are now almost two months into the first quarter, and note that total
worldwide net sales are tracking slightly above our growth expectations; at the
same time, we are seeing a greater-than-expected shift in sales mix toward
higher-end, lower-margin diamond
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jewelry. Given all that, we believe that earnings are currently on-track to
achieve our expectation for the first quarter."
Today's Conference Call
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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. Investors may listen to the call at www.tiffany.com
(click on "About Tiffany," "Shareholder Information," "Conference Call") and
www.streetevents.com.
Next Scheduled Announcement
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The Company intends to report its first quarter results on May 31, 2007 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 future notifications of conference calls
and 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
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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 tradenames 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 margin, expenses, earnings, capital expenditures 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 2005 Annual Report on Form
10-K and in other 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
(Unaudited)
NON-GAAP MEASURES
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The Company's reported sales reflect either a translation-related benefit from
strengthening foreign currencies or a detriment from a strengthening U.S.
dollar.
The Company reports information in accordance with U.S. Generally Accepted
Accounting Principles ("GAAP"). Internally, management monitors its
international sales performance 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 believes this
constant-exchange-rate measure provides a more representative assessment of the
sales performance 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 sales percentage increases (decreases) from the
GAAP to the non-GAAP basis versus previous year:
Fourth Quarter 2006 vs. 2005 Full Year 2006 vs. 2005
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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 15% 1% 14% 11% - 11%
U.S. Retail 13% - 13% 9% - 9%
International Retail 15% 3% 12% 12% (1%) 13%
Japan Retail (1%) (1%) - (1%) (5%) 4%
Other Asia- Pacific 30% 4% 26% 25% 2% 23%
Europe 37% 13% 24% 28% 5% 23%
Comparable Store Sales:
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Worldwide 9% 1% 8% 6% - 6%
U.S. Retail 9% - 9% 5% - 5%
International Retail 9% 3% 6% 7% (1%) 8%
Japan Retail (5%) (1%) (4%) (4%) (4%) -
Other Asia- Pacific 26% 4% 22% 24% 2% 22%
Europe 32% 13% 19% 25% 5% 20%
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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited, in thousands, except per share amounts)
Three Months
Ended January 31, Years Ended January 31,
-------------------------------- ---------------------------------
2007 2006 2007 2006
-------------- -------------- -------------- ---------------
Net sales $ 986,354 $ 858,446 $ 2,648,321 $ 2,395,153
Cost of sales 422,258 353,541 1,172,646 1,052,813
-------------- -------------- -------------- ---------------
Gross profit 564,096 504,905 1,475,675 1,342,340
Selling, general and administrative expenses 339,600 302,374 1,060,240 959,635
-------------- -------------- -------------- ---------------
Earnings from operations 224,496 202,531 415,435 382,705
Other (income) expenses, net 2,943 2,378 11,000 14,731
-------------- -------------- -------------- ---------------
Earnings before income taxes 221,553 200,153 404,435 367,974
Provision for income taxes 81,054 59,896 150,508 113,319
-------------- -------------- -------------- ---------------
Net earnings $ 140,499 $ 140,257 $ 253,927 $ 254,655
============== ============== ============== ===============
Net earnings per share:
Basic $ 1.04 $ 0.99 $ 1.84 $ 1.78
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Diluted $ 1.02 $ 0.97 $ 1.80 $ 1.75
============== ============== ============== ===============
Weighted-average number of common shares:
Basic 135,584 142,386 138,362 142,976
Diluted 138,322 145,258 140,841 145,578
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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
January 31, January 31,
2007 2006
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ASSETS
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Current assets:
Cash and cash equivalents and short-term investments $ 192,003 $ 393,609
Accounts receivable, net 168,973 142,294
Inventories, net 1,214,622 1,060,164
Deferred income taxes 73,455 69,576
Prepaid expenses and other current assets 57,591 33,200
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Total current assets 1,706,644 1,698,843
Property, plant and equipment, net 932,389 866,004
Other assets, net 206,477 212,425
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$ 2,845,510 $ 2,777,272
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Short-term borrowings $ 106,681 $ 38,942
Current portion of long-term debt 5,398 6,186
Accounts payable and accrued liabilities 215,967 202,646
Income taxes payable 63,114 60,364
Merchandise and other customer credits 61,511 56,472
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Total current liabilities 452,671 364,610
Long-term debt 406,383 426,548
Postretirement/employment benefit obligations 84,466 71,865
Other long-term liabilities 97,095 83,336
Stockholders' equity 1,804,895 1,830,913
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$ 2,845,510 $ 2,777,272
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