Tiffany & Co. Logo

Print Print page   Email Email page   PDF Download PDF    Add to Briefcase
« Previous Release | Next Release »



Tiffany Reports Substantially Higher-Than-Expected Sales And Earnings Growth In Its Second Quarter

NEW YORK--(August 26, 2011)-- Tiffany & Co. (NYSE: TIF) today announced its financial results for the second quarter ended July 31, 2011. Net sales rose 30% over the prior year due to strong growth in all geographic regions. Net earnings increased 33% and, excluding nonrecurring charges, rose 58% in the quarter (see attached "Non-GAAP Measures" schedule). Net earnings were $0.69 per diluted share in the quarter and, excluding nonrecurring charges, were $0.86 per diluted share. Management increased its earnings forecast for fiscal 2011 to reflect the better-than-expected second quarter results.

Michael J. Kowalski, chairman and chief executive officer, said, "We are extremely pleased by these results which confirm the growing global appeal of Tiffany's product offerings. In addition, we have been able to absorb precious metal and gemstone cost increases while improving our gross and operating margins."

Second quarter (three months ended July 31, 2011) summary:

First half (six months ended July 31, 2011) summary:

Net sales highlights by segment:

Other financial highlights:

Mr. Kowalski said, "Despite continuing economic uncertainty, our strong first half performance gives us ample reason to remain confident about our prospects for the balance of the year. We are encouraged that total worldwide sales growth in the third quarter-to-date is continuing to exceed our expectations due to noteworthy strength in the Americas, Asia-Pacific and Japan, demonstrating, once again, the attraction of the TIFFANY & CO. brand. We are increasing our full year earnings forecast to $3.65 - $3.75 per diluted share (not including nonrecurring expenses) from the previous forecast of $3.45 - $3.55 per diluted share due to the better-than-expected second quarter results."

Outlook for 2011:

Management's outlook for the year ending January 31, 2012 is based on the following assumptions which may or may not prove valid:

    a)   A high-teens percentage increase in worldwide net sales (in U.S. dollars).
    b)   Sales assumptions by region (in U.S. dollars) include a high-teens percentage increase in the Americas, at least a 30% increase in Asia-Pacific, at least a 20% increase in Europe, and a high-single-digit percentage increase in Japan. Other sales are expected to increase approximately 25%.
    c)   Opening 17 Company-operated stores including six in the Americas, three in Europe and eight in Asia-Pacific, and a net reduction of one location in Japan.
    d)   Operating margin increasing more than one full point due to an improved SG&A expenses (excluding nonrecurring items) to sales ratio and a higher gross margin.
    e)   Interest and other expenses, net of approximately $45 million.
    f)   An effective income tax rate of approximately 34%.
    g)   A net earnings increase of 25% - 28% to $3.65 - $3.75 per diluted share (not including nonrecurring expenses), compared with a previous forecast of $3.45 - $3.55 per diluted share (not including nonrecurring expenses). Nonrecurring expenses are related to the relocation of Tiffany's New York headquarters staff and have reduced net earnings in 2011 by $0.20 per share.
    h)   An increase in net inventories of more than 15%.
    i)   Capital expenditures of approximately $250 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 third quarter results on Tuesday November 29, 2011. To be notified of future announcements, 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, Asia-Pacific, Japan 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, interest and other expenses, the effective income tax rate, 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 2010 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

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:

      Second Quarter 2011 vs. 2010     First Half 2011 vs. 2010  
     

GAAP
Reported

 

Translation
Effect

 

Constant-
Exchange-Rate
Basis

   

GAAP
Reported

 

Translation
Effect

 

Constant-
Exchange-Rate
Basis

 

Net Sales:

                             
Worldwide     30%   6%   24%     25%   5%   20%  
Americas     25%   1%   24%     22%   1%   21%  
Asia-Pacific     55%   10%   45%     46%   8%   38%  
Japan     21%   13%   8%     14%   12%   2%  
Europe    

32%

  15%   17%     28%   10%   18%  

Comparable Store Sales:

                   
Worldwide     28%   6%   22%     24%   6%   18%  
Americas     24%   1%   23%     21%   1%   20%  
Asia-Pacific     51%   10%   41%     41%   8%   33%  
Japan     22%   14%   8%     15%   12%   3%  
Europe     25%   14%   11%     23%   11%   12%  

Net Earnings

The accompanying press release presents net earnings and highlights current year and prior year nonrecurring items in the text. Management believes excluding such items presents the Company's second 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 July 31, 2011. The following table reconciles GAAP net earnings and net earnings per diluted share ("EPS") to the non-GAAP net earnings and net earnings per diluted share, as adjusted:

      Three Months Ended

July 31, 2011

    Three Months Ended

July 31, 2010

(in thousands, except per share amounts)    

$
(after tax)

 

Diluted
EPS

   

$
(after tax)

 

Diluted
EPS

Net earnings, as reported     $ 90,043   $ 0.69     $ 67,675   $ 0.53
Headquarters relocation a       20,991     0.16       2,392     0.02
Net earnings, as adjusted     $ 111,034   $ 0.86     $ 70,067   $ 0.55
a  

On a pre-tax basis includes charges of $0 and $289,000 within cost of sales and $34,497,000 and
$3,656,000 within SG&A for the three months ended July 31, 2011 and 2010 associated with
Tiffany's consolidation of its New York headquarters staff within one location.

     

Six Months Ended
July 31, 2011

   

Six Months Ended
July 31, 2010

(in thousands, except per share amounts)    

$
(after tax)

 

Diluted
EPS

   

$
(after tax)

 

Diluted
EPS

Net earnings, as reported     $ 171,106   $ 1.32     $ 132,100     $ 1.03  
Headquarters relocation a       25,994     0.20       2,987       0.02  
Tax benefit, net b                 (3,096 )     (0.02 )
Net earnings, as adjusted     $ 197,100   $ 1.52     $ 131,991     $ 1.03  
a  

On a pre-tax basis includes charges of $213,000 and $361,000 within cost of sales and $42,506,000
and $4,444,000 within SG&A for the six months ended July 31, 2011 and 2010 associated with
Tiffany's consolidation of its New York headquarters staff within one location.

     
b  

Includes $3,096,000 of tax benefits primarily related to a change in the tax status of certain
subsidiaries associated with the acquisition in 2009 of additional equity interests in diamond sourcing
and polishing operations.

                             
TIFFANY & CO. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS  
(Unaudited, in thousands, except per share amounts)  
                                     
                                     
                                     
                                     
     

 

Three Months Ended July 31,

     

 

Six Months Ended July 31,

 
        2011       2010         2011       2010  
Net sales     $ 872,712     $ 668,760       $ 1,633,730     $ 1,302,346  
                                     
Cost of sales       358,015       282,008         675,340       549,616  
                                     
Gross profit       514,697       386,752         958,390       752,730  
                                     
Selling, general and administrative expenses       374,157       273,146         681,884       533,707  
                                     
Earnings from operations       140,540       113,606         276,506       219,023  
                                     
Interest and other expenses, net       9,619       11,121         19,766       23,259  
                                     
Earnings from operations before income taxes       130,921       102,485         256,740       195,764  
                                     
Provision for income taxes       40,878       34,810         85,634       63,664  
                                     
Net earnings     $ 90,043     $ 67,675       $ 171,106     $ 132,100  
                                     
                                     
Net earnings per share:                                    
                                     
Basic     $ 0.70     $ 0.53       $ 1.34     $ 1.04  
Diluted     $ 0.69     $ 0.53       $ 1.32     $ 1.03  
                                     
                                     
Weighted-average number of common shares:                                    
                                     
Basic       128,030       126,897         127,816       126,798  
Diluted       129,794       128,385         129,587       128,464  
 
TIFFANY & CO. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
                       
                       
                       
                       
          July 31,     January 31,     July 31,
          2011     2011     2010

ASSETS

                     
                       
Current assets:                      
Cash and cash equivalents and short-term investments   $ 565,191   $ 740,871   $ 614,674
Accounts receivable, net       182,001     185,969     156,708
Inventories, net         1,836,874     1,625,302     1,553,117
Deferred income taxes       67,964     41,826     16,114
Prepaid expenses and other current assets       115,474     90,577     76,780
                       
Total current assets         2,767,504     2,684,545     2,417,393
                       
Property, plant and equipment, net       738,172     665,588     661,387
Other assets, net         425,212     385,536     367,781
                       
        $ 3,930,888   $ 3,735,669   $ 3,446,561
                       

LIABILITIES AND STOCKHOLDERS' EQUITY

               
                       
Current liabilities:                      
Short-term borrowings     $ 97,272   $ 38,891   $ 44,221
Current portion of long-term debt       61,728     60,855     269,960
Accounts payable and accrued liabilities       274,301     258,611     165,757
Income taxes payable       20,687     55,691     16,198
Merchandise and other customer credits       66,764     65,865     60,546
                       
Total current liabilities       520,752     479,913     556,682
                       
Long-term debt         534,673     588,494     467,855
Pension/postretirement benefit obligations       205,298     217,435     189,978
Other long-term liabilities       193,256     147,372     141,112
Deferred gains on sale-leasebacks       125,173     124,980     124,932
Stockholders' equity         2,351,736     2,177,475     1,966,002
                       
        $ 3,930,888   $ 3,735,669   $ 3,446,561

 

Tiffany & Co.
Mark L. Aaron, 212-230-5301

Close window | Back to top