Tiffany Reports Its Holiday Period Sales Results; Company Expects to Report Record Sales and Net Earnings in Full Year
Mr. Bogliolo added, “As I reflect on 2018, we accomplished what we set out to achieve. By increasing the levels of strategic investment spending in certain areas, we recovered lost ground from several years of soft sales trends and we expect to report record levels of net sales and net earnings in fiscal 2018 (see “Fiscal 2018 Outlook” below). Now the focus is to grow to new heights. To this purpose, we will continue to pursue the six key strategic priorities we introduced earlier in 2018 (Amplifying an evolved brand message; Renewing our product offerings and enhancing in-store presentations; Delivering an exciting omnichannel customer experience; Strengthening our competitive position and leading in key markets; Cultivating a more efficient operating model; and Inspiring an aligned and agile organization to win) which will require our on-going effort and commitment for years to come.
We are excited about making further meaningful progress on this journey in 2019, with plans for new product launches, an evolved marketing message, store expansions and website enhancements. We acknowledge that external pressures, difficult year-over-year sales comparisons and annualized internal spending are expected to have some negative effects on fiscal 2019 results, mostly in the first half of the year, but we believe that Tiffany is on a solid path for improved sales, margins, earnings and cash flow generation over the long-term (see “Fiscal 2019 Preliminary Outlook” below).”
Net sales by region in the holiday period were as follows:
-
In the
Americas , total net sales declined 1% to$514 million , with slight declines attributed to spending by both local customers and foreign tourists; comparable sales were equal to the prior year. On a constant-exchange-rate basis, both total sales and comparable sales were equal to the prior year. -
In
Asia-Pacific , total net sales of$226 million were 3% below the prior year, reflecting higher sales attributed to local customers, with strong growth in mainlandChina , but softness in certain other markets that are more dependent on foreign tourist spending; comparable sales declined 4%. On a constant-exchange-rate basis, total sales were equal to the prior year and comparable sales declined 2%. -
In
Japan , total net sales rose 4% to$150 million and comparable sales rose 4%. Management attributed the sales growth to higher spending by local customers. On a constant-exchange-rate basis, both total sales and comparable sales increased 4%. -
In
Europe , total net sales of$132 million were 4% below the prior year, and comparable sales declined 5%, due to varied results by country and modest declines in spending attributed to both local customers and foreign tourists. On a constant-exchange-rate basis, total sales rose 1% and comparable sales declined 1%. -
Other net sales of
$14 million were 11% below the prior year due to lower comparable sales in five stores in theU.A.E. -
Tiffany has opened ten Company-operated stores in the year-to-date and
closed four. At
December 31, 2018 , the Company operated 321 stores (124 in theAmericas , 90 inAsia-Pacific , 55 inJapan , 47 inEurope , and five in theUAE ), versus 316 stores a year ago (125 in theAmericas , 87 inAsia-Pacific , 54 inJapan , 46 inEurope , and four in theUAE ). - Sales results by jewelry category in the holiday period were as follows: Jewelry Collections increased 2%, while Engagement Jewelry and Designer Jewelry sales declined 3% and 8%, respectively.
Fiscal 2018 Outlook:
Based on these holiday period sales results, management now expects that
(i) worldwide net sales for fiscal 2018 will increase by 6%-7% over the
prior year both as reported and on a constant-exchange-rate basis and
(ii) net earnings per diluted share will likely be towards the lower end
of its previously-disclosed range of
Management also expects: (i) net cash provided by operating activities
of approximately
Fiscal 2019 Preliminary Outlook:
Given external challenges and uncertainties, management’s preliminary view for fiscal 2019 includes: (i) worldwide net sales increasing by a low-single-digit percentage over the prior year as reported and on a constant-exchange-rate basis; (ii) net earnings per diluted share increasing by a mid-single-digit percentage (which assumes a higher effective tax rate); and (iii) an expected decline in net earnings in the first half of the year, reflecting sales pressures (from lower foreign tourist spending and the effect of a stronger U.S. dollar) as well as expenses related to the annualized effect of higher strategic investment spending that began in the second quarter of 2018, among other factors. Management will provide additional information regarding its fiscal 2019 outlook when it reports full year results in March.
Next Scheduled Announcement:
The Company expects to report its fourth quarter and full year financial
results on
About
In 1837,
Today, with more than 13,000 employees,
Forward-Looking Statements:
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 2018 Outlook” and “Fiscal 2019
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; store productivity; the renovation of the Company’s
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 U.S. tax code) or changes in the
guidance related to, or interpretation of, such policies and
regulations; shifting tourism trends; regional instability; violence
(including terrorist activities); political activities or events
(including the potential for rapid and unexpected changes in government,
economic and political policies, the imposition of additional duties,
tariffs, taxes and other charges or other barriers to trade, including
as a result of changes in diplomatic and trade relations or agreements
with other countries); weather conditions that may affect local and
tourist consumer spending; changes in consumer confidence, preferences
and shopping patterns, as well as our ability to accurately predict and
timely respond to such changes; shifts in the Company’s product and
geographic sales mix; variations in the cost and availability of
diamonds, gemstones and precious metals; adverse publicity regarding the
Company and its products, the Company’s third-party vendors or the
diamond or jewelry industry more generally; any non-compliance by
third-party vendors or suppliers with the Company’s sourcing and quality
standards, codes of conduct, or contractual requirements as well as
applicable laws and regulations; changes in our competitive landscape;
disruptions impacting the Company’s business and operations; failure to
successfully implement or make changes to the Company’s information
systems; gains or losses in the trading value of the Company’s stock,
which may impact the amount of stock repurchased through open market
transactions, including through Rule 10b5-1 plans and accelerated share
repurchase or other structured repurchase transaction, and/or privately
negotiated transactions; the Company’s receipt of any required approvals
to the aforementioned renovation of its
Additional information about potential risks and uncertainties that
could affect the Company’s business and financial results is included
under “Risk Factors” and in “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
(Unaudited)
NON-GAAP MEASURES
The Company reports information in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Internally, management also monitors and measures its performance using certain sales and earnings measures that include or exclude amounts, or are subject to adjustments that have the effect of including or excluding amounts, from the most directly comparable GAAP measure (“non-GAAP financial measures”). The Company presents such non-GAAP financial measures in reporting its financial results to provide investors with useful supplemental information that will allow them to evaluate the Company's operating results using the same measures that management uses to monitor and measure its performance. 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. These non-GAAP financial measures presented here may not be comparable to similarly-titled measures used by other companies.
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”). Sales on a constant-exchange-rate basis are calculated by taking the current year’s sales in local currencies and translating them into U.S. dollars using the prior year’s foreign currency exchange rates. Management believes this constant-exchange-rate basis provides a useful supplemental basis for the assessment of sales performance and of 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:
Two Months Ended
December 31, 2018 |
Eleven Months Ended
December 31, 2018 |
||||||||||||||||||
GAAP
Reported |
Translation
Effect |
Constant-
Exchange- Rate Basis |
GAAP
Reported |
Translation
Effect |
Constant-
Exchange- Rate Basis |
||||||||||||||
Net Sales: |
|||||||||||||||||||
Worldwide | (1 | )% | (1 | )% | — | % | 7 | % | — | % | 7 | % | |||||||
Americas | (1 | ) | (1 | ) | — | 5 | — | 5 | |||||||||||
Asia-Pacific | (3 | ) | (3 | ) | — | 14 | — | 14 | |||||||||||
Japan | 4 | — | 4 | 8 | 1 | 7 | |||||||||||||
Europe | (4 | ) | (5 | ) | 1 | 3 | 1 | 2 | |||||||||||
Other | (11 | ) | — | (11 | ) | (16 | ) | — | (16 | ) | |||||||||
Comparable Store Sales: |
|||||||||||||||||||
Worldwide | (2 | )% | (2 | )% | — | % | 4 | % | — | % | 4 | % | |||||||
Americas | — | — | — | 5 | — | 5 | |||||||||||||
Asia-Pacific | (4 | ) | (2 | ) | (2 | ) | 5 | — | 5 | ||||||||||
Japan | 4 | — | 4 | 7 | 1 | 6 | |||||||||||||
Europe | (5 | ) | (4 | ) | (1 | ) | (2 | ) | 1 | (3 | ) | ||||||||
Other | (34 | ) | — | (34 | ) | (15 | ) | — | (15 | ) |
Beginning in the first quarter of 2018, the Company revised its
definition of comparable sales to include e-commerce and catalog sales,
in addition to sales transacted in Company-operated stores open for more
than 12 months. For reference purposes, the following tables reconcile
the comparable sales percentage increases (decreases) from the GAAP to
the non-GAAP basis versus the previous year for the two and eleven
months ended
Two Months Ended |
Two Months Ended |
||||||||||||||||||
GAAP
Reported |
Translation
Effect |
Constant-
Exchange- Rate Basis |
GAAP
Reported |
Translation
Effect |
Constant-
Exchange- Rate Basis |
||||||||||||||
Comparable Store Sales: | |||||||||||||||||||
Worldwide | 6 | % | 3 | % | 3 | % | 5 | % | 2 | % | 3 | % | |||||||
Americas | 6 | — | 6 | 6 | — | 6 | |||||||||||||
Asia-Pacific | 8 | 4 | 4 | 7 | 3 | 4 | |||||||||||||
Japan | — | — | — | — | — | — | |||||||||||||
Europe | 5 | 9 | (4 | ) | 2 | 9 | (7 | ) | |||||||||||
Other | 14 | — | 14 | 14 | — | 14 |
Eleven Months Ended |
Eleven Months Ended |
||||||||||||||||||
GAAP
Reported |
Translation
Effect |
Constant-
Exchange- Rate Basis |
GAAP
Reported |
Translation
Effect |
Constant-
Exchange- Rate Basis |
||||||||||||||
Comparable Store Sales: | |||||||||||||||||||
Worldwide | — | % | — | % | — | % | — | % | — | % | — |
% |
|||||||
Americas | 1 | — | 1 | 1 | 1 | — | |||||||||||||
Asia-Pacific | — | 1 | (1 | ) | — | 1 | (1 | ) | |||||||||||
Japan | (1 | ) | (3 | ) | 2 | (1 | ) | (3 | ) | 2 | |||||||||
Europe | — | 2 | (2 | ) | (2 | ) | 1 | (3 | ) | ||||||||||
Other | 3 | — | 3 | 3 | — | 3 |
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.
TIF - E
View source version on businesswire.com: https://www.businesswire.com/news/home/20190118005079/en/
Source:
Tiffany & Co.
Mark L. Aaron, 212-230-5301
mark.aaron@tiffany.com