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 FIRST QUARTER RESULTS
-------------------------------------
New York, N.Y., May 29, 2009 - Tiffany & Co. (NYSE: TIF) reported lower sales,
operating margin and net earnings for its first quarter ended April 30, 2009.
These financial results were consistent with management's expectations for the
quarter and the Company reaffirmed its outlook for the full year.
Net sales in the first quarter declined 22% to $523.1 million. 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), worldwide net sales declined 18%, with a 21% decline in
comparable store sales.
Net earnings in the first quarter were $24.3 million, or $0.20 per diluted
share, compared with $64.4 million, or $0.50 per diluted share, in the prior
year.
Michael J. Kowalski, chairman and chief executive officer, said, "Despite
reduced consumer demand in the luxury sector, Tiffany is, and is projected to
remain, solidly profitable and will generate substantial cash from operations.
We remain confident about the continued effectiveness of our fundamental growth
strategies, and in their ability to generate superior financial returns when
economic conditions improve."
Net sales by segment were as follows:
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o In the Americas, first quarter sales declined 31% to $259.0 million.
Comparable U.S. store sales declined 34%, which included a 32% decline
in comparable branch store sales and a 42% decline in New York
flagship store sales. Tiffany opened stores in Toronto (its second)
and Guadalajara. Combined Internet and catalog sales in the U.S.
declined 17%.
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o In the Asia-Pacific region, first quarter sales declined 9% to $201.4
million. Results varied by country. On a constant-exchange-rate basis,
sales declined 7% and comparable store sales declined 9%. The Company
opened stores in Hangzhou, China and Busan, Korea, and closed one in
Ikebukuro, Japan.
o In Europe, sales of $55.6 million were 8% below the prior year. On a
constant-exchange-rate basis, sales increased 18% largely due to
incremental sales from new stores opened in the prior year, and
comparable store sales rose 3%.
o The Company operated 209 TIFFANY & CO. stores and boutiques at April
30, 2009 (88 in the Americas, 97 in Asia-Pacific and 24 in Europe),
versus 192 locations a year ago (81 in the Americas, 93 in
Asia-Pacific and 18 in Europe).
o Other sales declined 43% to $7.0 million in the first quarter due to
reduced wholesale sales of diamonds partly offset by higher sales in
soon-to-be-closed IRIDESSE stores.
Other financial highlights were:
- --------------------------------
o Gross margin (gross profit as a percentage of net sales) was 55.6% in
the first quarter, compared with 57.1% in the prior year, primarily
due to higher product costs.
o Selling, general and administrative (SG&A) expenses declined 15% in
the first quarter, reflecting reduced staff and marketing costs, as
well as variable cost savings tied to lower sales levels.
o Interest and other expenses, net in the first quarter were higher than
the prior year primarily due to increased interest expense related to
recent issuances of long-term debt.
o The effective tax rate was 42.0% in the first quarter compared with
36.7% in the prior year, due to a shift in the geographical mix of
earnings, but the Company continues to expect an effective tax rate of
approximately 37% for the full year.
o Accounts receivable at April 30, 2009 were 30% lower than the prior
year as a result of the sales decline.
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o Net inventories at April 30, 2009 were 6% above the prior year due to
the opening of new stores and lower sales. Consistent with the
Company's objective, net inventories have declined 3% since the
beginning of the fiscal year and are projected to decline by a
single-digit percentage for the full year.
o The Company's balance sheet liquidity at April 30, 2009 included: cash
and cash equivalents of $303.7 million (versus $159.6 million a year
ago) and total short-term borrowings and long-term debt of $821.8
million (versus $611.2 million a year ago). The increase in debt
included $400 million of new long-term debt issuances which have been
and will be applied to retire existing debt and for general corporate
purposes.
2009 Outlook:
- -------------
Mr. Kowalski added, "We are now almost one month into our second quarter and,
although it's still too early to draw any conclusions, we are seeing a lessening
in the rate of year-over-year total sales decline, as we expected. The rate of
decline has improved slightly in the Americas and to a greater extent in other
regions. Therefore, we reaffirm our previously-announced full year expectations
(based on assumptions that may or may not prove valid) which continue to call
for: (i) a worldwide sales decline of approximately 11% including regional sales
declines of: (a) a mid-teens percentage in the Americas (greater in the first
half of the year), (b) a mid-single-digit percentage in the Asia-Pacific region,
(c) a high-single-digit percentage in Europe, as well as (d) a 20% decline in
Other sales; (ii) a decline in the operating margin (when the prior year is
adjusted to exclude one-time items) due to a lower gross margin and the
anticipated sales de-leverage effect on fixed costs, partly offset by savings
tied to staff reductions as well as other cost-related initiatives; and (iii)
net earnings from continuing operations of $1.50 - $1.60 per diluted share. Our
balance sheet provides us with more than ample liquidity to pursue our growth
strategies."
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").
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Next Scheduled Announcement
- ---------------------------
The Company expects to report its second quarter results on Friday, August 28,
2009 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").
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, operating margin,
earnings, inventories and cash flow. 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 2008 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 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 basis 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:
First Quarter 2009 vs. 2008
------------------------------------------------
Constant-
GAAP Translation Exchange-
Reported Effect Rate Basis
------------------------------------------------
Net Sales:
- ----------
Worldwide (22)% (4)% (18)%
Americas (31)% (1)% (30)%
U.S. (31)% -- (31)%
Asia-Pacific (9)% (2)% (7)%
Japan (7)% 6 % (13)%
Other Asia-Pacific (11)% (15)% 4 %
Europe (8)% (26)% 18 %
Comparable Store Sales:
- -----------------------
Worldwide (24)% (3)% (21)%
Americas (34)% (2)% (32)%
U.S. (34)% -- (34)%
Asia-Pacific (10)% (1)% (9)%
Japan (6)% 7 % (13)%
Other Asia-Pacific (16)% (11)% (5)%
Europe (19)% (22)% 3 %
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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,
-------------------------------
2009 2008
-------------- -------------
Net sales $ 523,059 $ 668,149
Cost of sales 232,032 286,895
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Gross profit 291,027 381,254
Selling, general and administrative expenses 236,587 277,945
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Earnings from operations 54,440 103,309
Interest and other expenses, net 12,444 1,508
-------------- -------------
Earnings from operations before income taxes 41,996 101,801
Provision for income taxes 17,655 37,411
-------------- -------------
Net earnings $ 24,341 $ 64,390
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Net earnings per share:
Basic $ 0.20 $ 0.51
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Diluted $ 0.20 $ 0.50
============== =============
Weighted-average number of common shares:
Basic 124,001 126,458
Diluted 124,164 128,773
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TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
April 30, January 31, April 30,
2009 2009 2008
----------------- ----------------- ------------------
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 303,729 $ 160,445 $ 159,625
Accounts receivable, net 135,437 164,447 193,154
Inventories, net 1,553,717 1,601,236 1,466,166
Deferred income taxes 12,130 13,640 27,388
Prepaid expenses and other current assets 120,772 108,966 86,784
------------- ------------- --------------
Total current assets 2,125,785 2,048,734 1,933,117
Property, plant and equipment, net 721,452 741,048 742,116
Other assets, net 315,015 312,501 334,618
------------- ------------- --------------
$ 3,162,252 $ 3,102,283 $ 3,009,851
============= ============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term borrowings $ 74,199 $ 242,966 $ 199,421
Current portion of long-term debt 40,170 40,426 65,728
Accounts payable and accrued liabilities 163,102 223,566 175,777
Income taxes payable 25,324 27,653 49,979
Merchandise and other customer credits 64,239 67,311 68,573
------------- ------------- --------------
Total current liabilities 367,034 601,922 559,478
Long-term debt 707,477 425,412 346,010
Pension/postretirement benefit obligations 203,550 200,603 81,836
Other long-term liabilities 151,977 152,334 134,422
Deferred gains on sale-leasebacks 125,555 133,641 144,577
Stockholders' equity 1,606,659 1,588,371 1,743,528
------------- ------------- --------------
$ 3,162,252 $ 3,102,283 $ 3,009,851
============= ============= ==============
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