Exhibit 99.1
TIFFANY & CO.
NEWS RELEASE
Fifth Avenue & 57th Street Contact:
New York, N.Y. 10022 --------
Mark L. Aaron
(212) 230-5301
Mark.aaron@tiffany.com
TIFFANY'S FIRST QUARTER SALES UP 12% AND E.P.S. UP 28%
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New York, N.Y., May 30, 2008 - Tiffany & Co. (NYSE: TIF) today reported results
for the three months (first quarter) ended April 30, 2008. Sales results
benefited from strong growth in Asia-Pacific and Europe. Net earnings per
diluted share surpassed management's expectation due to higher-than-expected
sales and operating margin.
Worldwide first quarter net sales increased 12% to $668.1 million, versus $595.7
million in the prior year. 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 and comparable store sales
rose 8% and 3%, respectively.
Net earnings from continuing operations rose 20% to $64.4 million in the first
quarter, versus $53.8 million in the prior year. Net earnings from continuing
operations per diluted share increased 28% to $0.50, versus $0.39 a year ago.
Segment reporting changed:
- --------------------------
Effective with this first quarter, management has changed segment reporting to
reflect operating results for the following regions: the Americas, Asia-Pacific
and Europe. Prior year results have been revised to reflect this change. The
Company has expanded its global reach and management has determined to assess
performance on a region-by-region basis, rather than on a
channel-of-distribution basis.
First quarter sales by region were as follows:
- ----------------------------------------------
o Total sales in the Americas region (consisting of sales in the U.S.,
Canada and Latin/South America) increased 6% to $373.6 million, versus
$353.3 million in the prior year, due to incremental sales from new
stores. Comparable store sales
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in the U.S. were equal to the prior year, consisting of a 16% increase
in Tiffany's New York flagship store (due to increased foreign tourist
spending) and a 4% decline in branch store sales. Combined catalog and
Internet sales in the U.S. increased 1%.
o Sales in the Asia-Pacific region (which includes sales in Japan, in
Asia-Pacific countries outside Japan, and in the Middle East)
increased 21% to $222.0 million from $183.1 million. On a
constant-exchange-rate basis, sales rose 10% and comparable store
sales increased 4% reflecting strong growth in all Asia-Pacific
countries other than Japan.
o Sales in Europe increased 38% to $60.1 million, versus $43.5 million.
On a constant-exchange-rate basis, a 30% increase in sales was due to
12% comparable store sales growth and incremental sales from four new
stores.
o The Company operated 192 TIFFANY & CO. stores and boutiques at April
30, 2008 (81 in the Americas, 93 in the Asia-Pacific region and 18 in
Europe), compared with 171 (74, 83 and 14 in those respective regions)
a year ago.
o Other sales declined 21% to $12.4 million, from $15.7 million a year
ago, due to reduced wholesale sales of diamonds made in connection
with the Company's diamond sourcing program.
Michael J. Kowalski, chairman and chief executive officer, said, "We are pleased
to start the year with sales and earnings growth above our expectations. A 12%
increase in worldwide sales, despite only modest growth in the U.S. due to
challenging conditions, reflects the benefit of globally-diversified
distribution."
Other financial highlights were:
- --------------------------------
o Gross margin (gross profit as a percentage of net sales) was 57.1%
versus 56.1% in the prior year. The increase was due to sales leverage
on fixed costs and a decline in wholesale sales of diamonds. As
previously disclosed, effective with this first quarter the Company
changed from the LIFO method to the average cost method of inventory
accounting, and all prior-year results have been revised for the
change.
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o Selling, general and administrative ("SG&A") expenses increased 13%
due to higher labor and occupancy costs (related to new and existing
stores) and increased marketing expenses, as well as the translation
effect of stronger foreign currencies. The ratio of SG&A expenses to
net sales was 41.6% versus 41.3% in the prior year.
o The Company's effective tax rate was 36.7% compared with 36.5% a year
ago.
o The Company repurchased and retired 1,382,600 shares of its Common
Stock in the first quarter at a total cost of $54.8 million, or $39.66
per share. Under the current program, the Company had $566 million
available at April 30th for future repurchases through January 2011.
o Net inventories of $1.47 billion were 10% higher than a year ago,
partly due to increases in raw material and work-in-process
inventories for internal jewelry manufacturing. In addition, almost
half of the increase was due to the translation effect of stronger
foreign currencies.
o Total debt as a percentage of stockholders' equity was 35% at April
30, 2008, compared with 27% a year ago.
Mr. Kowalski continued, "We are continuing to pursue important expansion
opportunities in 2008 and expect to open approximately 24 stores across the
U.S., Asia-Pacific and Europe. And we will introduce a new, smaller store format
in the U.S. later this year. We believe Tiffany is well-positioned to gain
market share in this competitively-demanding environment."
2008 Outlook
- ------------
He added, "We are maintaining a cautious outlook for U.S. sales and do not
expect an improvement until later this year. Worldwide sales performance in
May-to-date is meeting our expectation which, consistent with the first quarter
pattern, reflects strength in markets throughout Asia-Pacific (other than Japan)
and Europe more than offsetting softness in U.S. sales. We remain on track to
achieve our full year growth expectations. Specifically, we are looking for
worldwide net sales growth of approximately 10% in 2008 and now expect net
earnings per diluted share to increase to $2.80 - $2.90."
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Today's Conference Call
- -----------------------
The Company will host a conference call today at 8:30 a.m. (Eastern Time) to
review these results and its outlook. Investors may listen at
http://investor.tiffany.com ("Events and Presentations").
Next Scheduled Announcement
- ---------------------------
The Company expects to report its second quarter results on Thursday August 28,
2008 with a conference call at 8:30 a.m. (Eastern Time) that day. To receive
notifications of conference calls and news release alerts, please register at
http://investor.tiffany.com ("E-Mail Alerts").
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 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 and earnings per
share. 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 2007 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
- -----------------
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 the previous year:
Three Months Ended
April 30, 2008
---------------------------------------------
Constant-
GAAP Translation Exchange-
Reported Effect Rate Basis
---------------------------------------------
Net Sales:
- ----------
Worldwide 12% 4% 8%
Americas 6% 1% 5%
U.S. 5% - 5%
Asia-Pacific 21% 11% 10%
Japan 13% 15% (2)%
Other Asia-Pacific 39% 7% 32%
Europe 38% 8% 30%
Comparable Store Sales:
- -----------------------
Worldwide 7% 4% 3%
Americas 1% - 1%
U.S. - - -
Asia-Pacific 15% 11% 4%
Japan 7% 14% (7)%
Other Asia-Pacific 28% 6% 22%
Europe 21% 9% 12%
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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,
----------------------------
2008 2007
------------ ------------
Net sales $ 668,149 $ 595,729
Cost of sales 286,895 261,771
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Gross profit 381,254 333,958
Selling, general and administrative expenses 277,945 246,041
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Earnings from continuing operations 103,309 87,917
Other expenses, net 1,508 3,085
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Earnings from continuing operations before income taxes 101,801 84,832
Provision for income taxes 37,411 31,005
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Net earnings from continuing operations 64,390 53,827
Earnings from discontinued operations, net of tax - 254
------------ ------------
Net earnings $ 64,390 $ 54,081
============ ============
Net earnings from continuing operations per share:
Basic $ 0.51 $ 0.39
============ ============
Diluted $ 0.50 $ 0.39
============ ============
Net earnings per share:
Basic $ 0.51 $ 0.40
============ ============
Diluted $ 0.50 $ 0.39
============ ============
Weighted-average number of common shares:
Basic 126,458 136,488
Diluted 128,773 139,724
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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
April 30, January 31, April 30,
2008 2008 2007
----------------- ----------------- ----------------
ASSETS
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Current assets:
Cash and cash equivalents and short-term investments $ 159,625 $ 246,654 $ 125,782
Accounts receivable, net 193,154 193,974 159,648
Inventories, net 1,466,166 1,372,397 1,335,729
Deferred income taxes 27,388 20,218 25,070
Prepaid expenses and other current assets 86,784 89,072 72,663
Assets held for sale - - 74,783
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Total current assets 1,933,117 1,922,315 1,793,675
Property, plant and equipment, net 742,116 748,210 918,873
Other assets, net 334,618 330,379 217,012
Assets held for sale - noncurrent - - 32,551
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$ 3,009,851 $ 3,000,904 $ 2,962,111
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term borrowings $ 199,421 $ 44,032 $ 115,811
Current portion of long-term debt 65,728 65,640 5,451
Accounts payable and accrued liabilities 175,777 203,622 163,047
Income taxes payable 49,979 203,611 36,345
Merchandise and other customer credits 68,573 67,956 62,332
Liabilities held for sale - - 14,975
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Total current liabilities 559,478 584,861 397,961
Long-term debt 346,010 343,465 401,716
Pension/postretirement benefit obligations 81,836 79,254 89,937
Other long-term liabilities 134,422 131,610 129,396
Deferred gains on sale-leasebacks 144,577 145,599 4,878
Liabilities held for sale - noncurrent - - 4,440
Stockholders' equity 1,743,528 1,716,115 1,933,783
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$ 3,009,851 $ 3,000,904 $ 2,962,111
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