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Tiffany Reports Third Quarter Results; Sales and Earnings Growth Top Expectations

New York, N.Y., November 24, 2010 - Tiffany & Co. (NYSE: TIF) reported a 14% increase in its worldwide net sales for the third quarter ended October 31, 2010, with growth occurring in all geographic regions. The sales increase and a higher operating margin contributed to a higher-than-expected 27% increase in net earnings; net earnings from continuing operations adjusted to exclude nonrecurring items increased 43% (see attached "Non-GAAP Measures" schedule). In response, management increased its outlook for full year earnings growth.

Michael J. Kowalski, chairman and chief executive officer, said, "As third quarter results demonstrate once again, Tiffany's expanding, globally diversified store presence provides a significant platform to generate sustainable sales and earnings growth."

In the three months (third quarter) ended October 31, 2010:

In the nine months (year-to-date) ended October 31, 2010:

Net sales highlights by segment:

Mr. Kowalski said, "We are quite pleased with the performance of new stores and recent product introductions including the yellow diamond and leather goods collections."

Other financial highlights:

Mr. Kowalski added, "We are now a few weeks into the all-important two-month holiday season and sales growth is exceeding our expectations, although the majority of the holiday season is certainly still ahead of us.  Based largely on having achieved higher-than-expected third quarter earnings, as well as favorable gross margin trends, we are increasing our annual net earnings outlook (excluding nonrecurring items) to $2.72 - $2.77 per diluted share, from $2.60 - $2.65 previously."

2010 Outlook:
Management's outlook for the year ending January 31, 2011 is based on the following assumptions which may or may not prove valid:

  1. A worldwide sales increase of approximately 12%.
  2. By region, sales for the year are expected to increase approximately 10% in the Americas, to increase by a mid-twenties percentage in Asia-Pacific, to increase by a low-single-digit percentage in Japan and to increase by a high-teens percentage in Europe. Other sales are expected to decline modestly.
  3. An increased operating margin primarily due to a higher gross margin, as well as an improved ratio of SG&A expenses (excluding nonrecurring items) to sales.
  4. Interest and other expenses, net of approximately $50 million.
  5. An effective income tax rate of approximately 34%.
  6. Net earnings from continuing operations (excluding nonrecurring items) of $2.72 - $2.77 per diluted share. This full year forecast excludes any nonrecurring items such as expenses related to the pending relocation of Tiffany's New York headquarters staff, as well as a net tax benefit recorded in the first quarter which, in total, will reduce earnings in 2010 by approximately $0.06 per diluted share; the Company's previous earnings forecast also excluded nonrecurring items.
  7. Capital expenditures of approximately $150 million.

Today's Conference Call:
The Company will host a conference call today at 8:30 a.m. (Eastern Time) to review these actual results and its outlook. Investors may listen at http://investor.tiffany.com ("Events and Presentations").

Next Scheduled Announcement:
The Company expects to report its sales for the November - December holiday period on January 11, 2011. Management will not comment on such sales results until that time. To receive notifications of news releases, please register at http://investor.tiffany.com ("E-Mail Alerts").

Tiffany & Co. operates jewelry 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, Japan, Asia-Pacific and Europe and engages in direct selling through Internet, catalog and business gift operations. 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, operating margin, net earnings, inventories and capital expenditures. 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 2009 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.

NON-GAAP MEASURES

Net Sales

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 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:

Net Earnings from Continuing Operations

The accompanying press release presents net earnings from continuing operations and highlights current-year and prior year nonrecurring items in the text. Management believes excluding such items presents the Company's third quarter and year-to-date results on a more comparable basis to the corresponding period in the prior year, thereby providing investors with an additional perspective to analyze the results of operations of the Company at October 31, 2010. The following table reconciles GAAP net earnings from continuing operations and net earnings from continuing operations per diluted share ("EPS") to the non-GAAP net earnings from continuing operations and net earnings from continuing operations per diluted share, as adjusted:

  1. On a pre-tax basis includes a $687,000 charge within cost of sales and $10,539,000 charge within SG&A for the nine months ended October 31, 2010 associated with Tiffany's plan to consolidate its New York headquarters staff within one location.
  2. Includes a $5,006,000 benefit related to a change in tax status of certain subsidiaries and a $1,910,000 charge related to the new health care reform legislation, both recorded within the provision for income taxes for the nine months ended October 31, 2010, and $11,220,000 of tax benefits as a result of favorable reserve adjustments relating to the settlement of certain tax audits and the expiration of statutory periods within the provision for income taxes for the nine months ended October 31, 2009.
  3. On a pre-tax basis includes a charge of $4,000,000 associated with the termination of a diamond sourcing agreement and a benefit of $4,442,000 from a loan recovery, both within SG&A for the nine months ended October 31, 2009.

Contacts:
James N. Fernandez
(212) 230-5315
Mark L. Aaron
(212) 230-5301



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