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Tiffany Reports First Quarter Results

NEW YORK, May 29, 2009 (BUSINESS WIRE) -- 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:

Other financial highlights were:

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").

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.

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

GAAP

Reported

Translation
Effect

Constant-
Exchange-
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%
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
Gross profit 291,027 381,254
Selling, general and administrative expenses 236,587 277,945
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
Net earnings per share:
Basic $0.20 $ 0.51
Diluted $0.20 $ 0.50
Weighted-average number of common shares:
Basic 124,001 126,458
Diluted 124,164 128,773
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
April 30,January 31,April 30,
200920092008

ASSETS

Current assets:
Cash and cash equivalents $303,729$160,445$159,625
Accounts receivable, net 135,437164,447193,154
Inventories, net 1,553,7171,601,2361,466,166
Deferred income taxes 12,13013,64027,388
Prepaid expenses and other current assets 120,772108,96686,784
Total current assets 2,125,7852,048,7341,933,117
Property, plant and equipment, net 721,452741,048742,116
Other assets, net 315,015312,501334,618
$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 40,17040,42665,728
Accounts payable and accrued liabilities 163,102223,566175,777
Income taxes payable 25,32427,65349,979
Merchandise and other customer credits 64,23967,31168,573
Total current liabilities 367,034601,922559,478
Long-term debt 707,477425,412346,010
Pension/postretirement benefit obligations 203,550200,60381,836
Other long-term liabilities 151,977152,334134,422
Deferred gains on sale-leasebacks 125,555133,641144,577
Stockholders' equity 1,606,6591,588,3711,743,528
$3,162,252$3,102,283$3,009,851

SOURCE: Tiffany & Co.

Tiffany & Co.
James N. Fernandez, 212-230-5315
or
Mark L. Aaron, 212-230-5301

Copyright Business Wire 2009

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