Tiffany's Annual Sales Up 15%

By JCK Online Staff -- JCK Online, 3/24/2008 2:59:00 PM

Tiffany & Co. reported Monday that its net sales increased 15 percent in the fiscal year ended Jan. 31, and rose 10 percent in the fourth quarter.

Net sales for the year totaled more than $2.9 billion. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, net sales increased 13 percent and worldwide comparable store sales rose 7 percent.

Net sales in the fourth quarter totaled just over $1 billion. On a constant-exchange-rate basis, net sales increased 7 percent due to incremental sales from newly opened stores and a 1 percent increase in worldwide comparable store sales.

Net earnings in the fiscal year increased 20 percent to $303.7 million; compared with $253.9 million during the prior year.

Net earnings in the fourth quarter declined 16 percent to $118.25 million, from $140.5 million, in the prior year.

Sales by channel of distribution were as follows:

* U.S. Retail sales increased 4 percent to $527.9 million in the fourth quarter and 11 percent to nearly $1.5 billion in the year due to higher spending per transaction in both periods as well as an increased number of transactions for the year. Sane-store sales declined 1 percent in the quarter and increased 7 percent in the year. During the quarter and year respectively, sales in the New York flagship store rose 10 percent and 21 percent (benefiting from higher sales to foreign tourists), while same-branch store sales declined 4 percent and increased 4 percent. During the quarter, the company opened three new U.S. stores, in Providence, R.I., Red Bank, N.J., and Santa Barbara, Calif.; and closed a store in Maui, Hawaii. The company operated 70 TIFFANY & CO. stores in the U.S. at the end of the year, versus 64 stores a year ago.

* International Retail sales rose 21 percent to $422.5 million in the fourth quarter and 19 percent to $1.2 billion in the year. On a constant-exchange-rate basis, sales rose 14 percent in the quarter and 15 percent in the year (same-store sales growth of 6 percent and 7 percent in the respective periods) due to increased sales in markets other than Japan. During the quarter, Tiffany opened additional retail locations in China and Italy and closed a boutique in Japan. The company operated 114 TIFFANY & CO. international stores and boutiques at the end of the year, versus 103 locations a year ago.

* Direct Marketing sales declined 1 percent in the fourth quarter to $77.3 million. For the year, Direct Marketing sales rose 5 percent to $182.1 million, largely due to an increase in the number of Internet orders.

* Other sales rose 9 percent to $25.3 million in the fourth quarter and 64 percent to $81.5 million in the year. Sales growth in both periods was largely due to wholesale sales of diamonds (which increased $2.7 million and $30.5 million). IRIDESSE sales increased due to the contribution from new stores. Results for the Little Switzerland business have been recorded in discontinued operations.

"We were pleased with Tiffany's strategic progress in 2007 and with our overall financial performance," said Michael J. Kowalski, Tiffany & Co. chairman and chief executive officer. "We opened new stores in important U.S. and international markets and expanded our product assortment with a range of new designs. Despite current uncertainties related to consumer confidence in the U.S., we will continue to take advantage of our strong balance sheet and infrastructure to pursue our planned expansion opportunities worldwide."

Kowalski added, "In 2008, we expect to see robust growth in our non-U.S. markets other than Japan and are experiencing such performance in the quarter-to-date. We remain cautious about the U.S., although comparable store sales are currently increasing slightly. We still expect a slight decline in comparable U.S. store sales in the first half of the year. Overall, our worldwide sales have increased in excess of 10 percent in the quarter-to-date.

"For the full year, our plan calls for: (i) net sales growth of approximately 10 percent, including comparable store sales increasing by low-single-digits in the U.S. and mid-single-digits internationally (which assumes the opening of six new U.S. stores and approximately 20 international locations)."