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Tiffany Reports Strong Growth In Sales and Earnings In Its Second Quarter

New York, N.Y., August 27, 2014 - Tiffany & Co. (NYSE: TIF) today reported its financial results for the three months ("second quarter") ended July 31, 2014. Net earnings rose 16% due to a 7% increase in worldwide net sales and a higher gross margin. Management increased its earnings forecast for the current fiscal year by five cents per share.

Michael J. Kowalski, chairman and chief executive officer, said, "These healthy second quarter results reflected solid sales growth in our stores, particularly in the Americas and Asia-Pacific regions. In addition, an improved gross margin was an important contributor to the earnings growth. We were also pleased with solid performance across most product categories, ranging from the success of perennial classics in fine, statement and engagement jewelry to our newest ATLAS collection, and we are excited about the current debut of our new TIFFANY T jewelry collection."

In the second quarter:

In the six months ("first half") ended July 31, 2014:

Net sales highlights by region were as follows:

Other financial highlights:

Outlook for 2014:

For the fiscal year ending January 31, 2015, management is now forecasting net earnings in a range of $4.20-$4.30 per diluted share, versus its most recently-published forecast of $4.15-$4.25 per diluted share. This full year forecast is based on the following assumptions, which are approximate and may or may not prove valid:

  1. Worldwide net sales increasing by a high-single-digit percentage.
  2. Opening 10 Company-operated stores and closing three existing stores: opening four in the Americas, two in Asia-Pacific, two in Japan, and one each in Europe and Russia, while closing one each in the Americas, Asia-Pacific and the U.A.E.
  3. Operating margin increasing due to a higher gross margin and SG&A expense growth less than sales growth.
  4. Interest and other expenses, net of $65 million with the increase over 2013 reflecting the interest cost on higher average levels of net-debt.
  5. An effective income tax rate of 35%.
  6. A 6% increase in net inventories.
  7. Capital expenditures of $270 million, versus $221 million last year, with the increase largely reflecting incremental investments in certain information technology systems.
  8. Free cash flow (cash flow from operating activities less capital expenditures) of at least $400 million.

Today's Conference Call:
The Company will conduct a conference call today at 8:30 a.m. (Eastern Time) to review actual results and the outlook. Please click on http://investor.tiffany.com ("Events and Presentations").

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 in the Americas, Asia-Pacific, Japan and Europe, as well as in the United Arab Emirates and Russia. It also engages in direct selling through Internet, catalog and business gift operations. For more information, please visit www.tiffany.com or call the shareholder information line at 800-TIF-0110.

Next Scheduled Announcement:
The Company expects to report third quarter results on Tuesday November 25th. To be notified of future announcements, please register at http://investor.tiffany.com ("E-Mail Alerts").

This document contains certain "forward-looking" statements concerning the Company's objectives and expectations with respect to sales, products, store openings and closings, operating margin, interest and other expenses, the effective income tax rate, net earnings, inventories, growth opportunities, capital expenditures and free 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 Form 10-K, 10-Q and 8-K 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

The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The Company's management does not, nor does it suggest that investors should, consider 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.

Net Sales

The Company's reported net sales reflect either a translation-related benefit from strengthening foreign currencies or a detriment from a strengthening U.S. dollar. Internally, management monitors and measures its sales performance on a non-GAAP basis that eliminates the positive or negative effects that result from translating sales made outside the U.S. 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 following table reconciles the sales percentage increases (decreases) from the GAAP to the non-GAAP basis versus the previous year:

Net Earnings

The accompanying press release presents net earnings and highlights expenses tied to certain items in the text. Management believes excluding such items presents the Company's 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, 2014. The following table reconciles certain GAAP amounts to non-GAAP amounts:

Contact:
Mark L. Aaron
212-230-5301
mark.aaron@tiffany.com

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