Tiffany Reports 8% Increase in Holiday Period Sales; Management Updates Guidance for Fiscal 2017 and Provides Preliminary Outlook for Fiscal 2018
He added, "However, while we are encouraged with the holiday sales results, we believe that the preceding negative comparable store sales trend can only be reversed on a sustainable basis by continuing to evolve our product offerings and customer experience and also by stepping up certain strategic spending in our business, all of which is reflected in our preliminary 2018 plans and earnings outlook. Nonetheless, our holiday period results confirm that the TIFFANY & CO. brand is strong, and we are excited about our numerous long-term global opportunities to capitalize on that strength."
Net sales by region and product categories in the holiday period were as follows:
Americas, total sales increased 7% to $516 millionand comparable store sales rose 6%. Management noted varying degrees of growth across most of the U.S., Canadaand Latin Americawith higher spending attributed primarily to local customers. On a constant-exchange-rate basis, there was a 6% increase in both total sales and comparable store sales.
Asia-Pacific region, total sales increased 16% to $232 million, due to a 7% increase in comparable store sales, new store openings and an increase in wholesale sales. Management attributed retail sales growth primarily to higher spending by local customers, and particularly noted growth in mainland China, Hong Kongand Korea. On a constant-exchange-rate basis, total sales and comparable store sales increased 13% and 4%, respectively.
Japan, total sales increased 1% to $145 millionand comparable store sales were unchanged. Management noted a difficult comparison to exceptionally strong growth in spending attributed to local customers in last year's holiday period. There was no currency translation effect on sales.
Europe, total sales rose 14% to $136 million, reflecting the opening of new stores (some of which management believes had negative effects on existing store sales in those markets), and comparable store sales rose 2%. Management noted varying performance across the region with overall sales growth attributed to higher local customer spending. On a constant-exchange-rate basis, total sales increased 5% and comparable store sales declined 7%.
Other total sales declined 10% to
$18 million; a 14% increase in comparable store sales was offset by a decline in wholesale sales of diamonds.
December 31, 2017, the Company operated 316 stores (125 in the Americas, 87 in Asia-Pacific, 54 in Japan, 46 in Europe, and four in the UAE), versus 314 stores a year ago (125 in the Americas, 86 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in the UAE).
- Sales results across product categories ranged from the strongest growth in the High, Fine and Solitaire and the Fashion jewelry categories, to fractional growth in the Engagement Jewelry and Wedding Bands category.
Fiscal 2017 Outlook:
Management's outlook for fiscal 2017 now calls for: (i) worldwide net
sales increasing over the prior year by approximately 4% as reported and
on a constant-exchange-rate basis and (ii) net earnings per diluted
share increasing by a double-digit percentage over 2016's net earnings
per diluted share of
Management's sales and earnings expectations, referenced above, are
approximations and are based on the Company's plans and assumptions for
the full year, including: (i) worldwide gross retail square footage
increasing 2%, net through nine store openings, seven relocations and
seven closings; (ii) operating margin above the prior year as reported
and also when excluding prior year charges (see "Non-GAAP Measures");
(iii) interest and other expenses, net of
Management also expects for fiscal 2017: (i) net cash provided by
operating activities of at least
Fiscal 2018 Preliminary Outlook:
Management's preliminary view for fiscal 2018 calls for a
mid-single-digit percentage increase in worldwide sales. Management also
anticipates increased levels of spending in a number of areas, including
technology, marketing communications, visual merchandising, digital, and
store presentations, which it believes are necessary to achieve its
longer term sales, margin and earnings growth objectives. As a result,
management expects net earnings per diluted share to be flat to slightly
down from the forecasted 2017 net earnings per diluted share noted in
clause (ii) of the first paragraph set forth in "Fiscal 2017 Outlook"
(which, for both years, does not include any effect from the recent tax
code revisions). However, net earnings per diluted share in fiscal 2018
is expected to benefit, in an amount yet to be determined, from an
expected lower effective income tax rate resulting from the recent
revisions to the
Next Scheduled Announcement:
The Company expects to report its fourth quarter and full year financial
Tiffany is the internationally-renowned jeweler founded in
The historical trends and results reported in this document should not
be considered an indication of future performance. Further, statements
contained in this document that are not statements of historical fact,
including those that refer to plans, assumptions and expectations for
the current fiscal year and future periods, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are not
limited to, the statements under "Fiscal 2017 Outlook" and "Fiscal 2018
Preliminary Outlook," as well as statements that can be identified by
the use of words such as ‘expects,' ‘projects,' ‘anticipates,'
‘assumes,' ‘forecasts,' ‘plans,' ‘believes,' ‘intends,' ‘estimates,'
‘pursues,' ‘scheduled,' ‘continues,' ‘outlook,' ‘may,' ‘will,' ‘can,'
‘should' and variations of such words and similar expressions. Examples
of forward-looking statements include, but are not limited to,
statements we make regarding the Company's plans, assumptions,
expectations, beliefs and objectives with respect to store openings and
closings; product introductions; sales; sales growth; sales trends;
store traffic; the Company's strategy and initiatives and the pace of
execution thereon; the Company's objectives to compete in the global
luxury market and to improve financial performance; retail prices; gross
margin; operating margin; expenses; interest and other expenses, net;
effective income tax rate; the nature, amount or scope of charges
resulting from recent revisions to the
These forward-looking statements are based upon the current views and
plans of management, speak only as of the date on which they are made
and are subject to a number of risks and uncertainties, many of which
are outside of our control. Actual results could therefore differ
materially from the planned, assumed or expected results expressed in,
or implied by, these forward-looking statements. While we cannot predict
all of the factors that could form the basis of such differences, key
factors include, but are not limited to: global macroeconomic and
geopolitical developments; changes in interest and foreign currency
rates; changes in taxation policies and regulations (including changes
effected by the recent revisions to the
Additional information about potential risks and uncertainties that
could affect the Company's business and financial results is included
under "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual
Report on Form 10-K for the fiscal year ended
The Company reports information in accordance with
The Company's reported net sales reflect either a translation-related
benefit from strengthening foreign currencies or a detriment from a
Two Months Ended
Eleven Months Ended
Comparable Store Sales:
Internally, management monitors and measures its earnings performance
excluding certain items listed below. Management believes excluding such
items provides a useful supplemental basis for the assessment of the
Company's results relative to the corresponding period in the prior
year. The following table reconciles certain GAAP amounts to non-GAAP
amounts for the fiscal year ended
|(in millions, except per share amounts)||GAAP||
|As a % of sales||44.2||%||43.3||%|
|Earnings from operations||721.2||38.0||759.2|
|As a % of sales||18.0||%||19.0||%|
|Provision for income taxes b||230.5||14.0||244.5|
|Diluted earnings per share *||3.55||0.19||3.75|
* Amounts may not add due to rounding.
a Expenses associated with the following:
$25.4 millionof pre-tax expense ( $16.0 millionafter tax expense, or $0.13per diluted share) associated with an asset impairment charge related to software costs capitalized in connection with the development of a new finished goods inventory management and merchandising information system; and
$12.6 millionof pre-tax expense ( $8.0 millionafter tax expense, or $0.06per diluted share) associated with impairment charges related to financing arrangements with diamond mining and exploration companies.
b The income tax effect resulting from the adjustments has been calculated as both current and deferred tax benefit (expense), based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying adjustment.
Free Cash Flow
Internally, management monitors its cash flow on a non-GAAP basis. Free cash flow is calculated by deducting capital expenditures from net cash provided by operating activities. The ability to generate free cash flow demonstrates how much cash the Company has available for discretionary and non-discretionary purposes after deduction of capital expenditures. The Company's operations require regular capital expenditures for the opening, renovation and expansion of stores and distribution and manufacturing facilities as well as ongoing investments in information technology. Management believes this provides a useful supplemental basis for assessing the Company's operating cash flows.
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