Tiffany Reports Holiday Period Sales Results
January 19 2016 - 6:40AM
Business Wire
Tiffany & Co. (NYSE: TIF) today reported its sales results
for the two-month period ended December 31st (“holiday period”).
Results were negatively affected by the strong U.S. dollar and weak
tourist spending in a number of markets. On a
constant-exchange-rate basis that excludes the effect of
translating foreign-currency-denominated sales into U.S. dollars
(see “Non-GAAP Measures” schedule), worldwide net sales declined 3%
(due to declines in the Americas and Asia-Pacific offsetting growth
in Japan and Europe) and comparable store sales declined 5%. There
were no noteworthy differences in performance among jewelry
categories. Reported in U.S. dollars, worldwide net sales of $961
million were 6% lower than the prior year.
Net sales highlights by region:
- In the Americas, on a
constant-exchange-rate basis total sales and comparable store sales
were 5% and 8% below the prior year, respectively. Lower sales
occurred across much of the U.S., exacerbated by lower foreign
tourist spending in New York and certain other U.S. markets which
management attributes to the strong U.S. dollar. Total sales rose
in Canada and Latin America. Reported in U.S. dollars, total sales
of $505 million were 7% below the prior year.
- In the Asia-Pacific region, on a
constant-exchange-rate basis total sales and comparable store sales
declined 6% and 9%, respectively. A continuation of strong sales
growth in China was more than offset by significant weakness in
Hong Kong and Singapore, with varying performance in other markets.
Reported in U.S. dollars, total sales of $187 million were 11%
below the prior year.
- In Japan, on a constant-exchange-rate
basis total sales increased 12% and comparable store sales rose
10%, reflecting higher sales to local customers and foreign
tourists. Reported in U.S. dollars, total sales rose 9% to $123
million.
- In Europe, on a constant-exchange-rate
basis total sales rose 4% and comparable store sales declined 2%.
Sales rose in the U.K., but performance was mixed across
continental Europe with a notable decline in France, all of which
reflected varying levels of demand among local customers and
foreign tourists. Reported in U.S. dollars, total sales in Europe
of $128 million were 4% below the prior year.
- Other sales on a constant-exchange-rate
basis declined 16% in total and comparable store sales on that same
basis decreased 12%. Reported in U.S. dollars, sales of $19 million
were 20% below the prior year.
- At December 31, 2015, the Company
operated 307 stores (125 in the Americas, 81 in Asia-Pacific, 56 in
Japan, 39 in Europe, and five stores in the United Arab Emirates
and one in Russia), versus 296 stores a year ago (123 in the
Americas, 73 in Asia-Pacific, 56 in Japan, 38 in Europe, and five
in the U.A.E. and one in Russia).
Frederic Cumenal, chief executive officer, said, “In the holiday
period, we continued to feel pressure from the strong U.S. dollar
on the translation of non-U.S. sales into dollars and on foreign
tourist spending in the U.S., which we expect will continue into
2016. We believe overall sales results were negatively affected by
restrained consumer spending tied to challenging and uncertain
global economic conditions and we expect 2015 earnings to come in
at the low end of our previously-set range of expectations.
Nonetheless, we were pleased with initial sales of our new fashion
and fine jewelry designs, a solid increase in worldwide e-commerce
sales and our ability to maintain gross margin at normal
levels.”
Full Year 2015 and 2016
Outlooks:
Management expects net earnings in the year ending January 31,
2016 to decline approximately 10% (compared with its
previously-reported forecast calling for a 5%-10% decline) from
last year’s $4.20 per diluted share (excluding the loan impairment
charge in the second quarter of 2015 and a debt extinguishment
charge in 2014). In addition, this forecast excludes a charge of
approximately four cents per diluted share being recorded in the
fourth quarter for staff and occupancy reductions. This forecast
does not assume recording any additional loan impairment charges.
The Company maintains its forecast to generate at least $500
million of free cash flow in the full year. While financial plans
for 2016 have not been finalized, management currently believes
that the strong dollar and global macro challenges will likely
result in minimal growth in net sales and net earnings, as reported
in dollars and excluding charges in 2015, for the year. All
assumptions and expectations are approximate and may or may not
prove valid.
Upcoming Announcements and
Events:
- The Company expects to report its
fourth quarter and full year results on March 18th before the
market opens. Management will conduct a conference call with a
question and answer session. To be notified of future
announcements, register at http://investor.tiffany.com (“E-Mail
Alerts”).
- The Company will host an
Analyst/Investor Day on April 12th at its corporate office in New
York during which members of Company management will provide
overviews of their respective areas of responsibility and strategic
direction. A live audio webcast of the presentations will be
available on the Company’s website at http://investor.tiffany.com.
Due to space restrictions, a limited number of in-person
invitations will be issued. For those unable to attend or to listen
to the live webcast, a replay will be available on the Company’s
website for 90 days following the event.
Tiffany is the internationally-renowned jeweler founded in New
York in 1837. Through its subsidiaries, Tiffany & Co.
manufactures products and operates TIFFANY & CO. retail stores
worldwide, and also 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.
Forward-Looking Statements:
The statements in this document that refer to plans and
expectations for the fourth quarter, the current fiscal year and
future periods are forward-looking statements that involve a number
of risks and uncertainties. Words such as 'expects,' 'anticipates,'
'forecasts,' 'plans,' 'believes,' 'continues,' 'may,' 'will,' and
variations of such words and similar expressions are intended to
identify such forward-looking statements. Examples of
forward-looking statements include, but are not limited to,
statements we make regarding the Company's objectives, expectations
and beliefs with respect to store openings and closings, product
introductions, sales, sales growth, retail prices, gross margin,
expenses, operating margin, effective income tax rate, net earnings
and net earnings per share, inventories, capital expenditures, cash
flow, liquidity, currency translation and growth opportunities.
These forward-looking statements are subject to a number of risks
and uncertainties, many of which are beyond the Company's control,
which could cause the Company's actual results to differ materially
from those indicated in these forward-looking statements. Such
factors include, but are not limited to, risks from global economic
conditions, decreases in consumer confidence, the Company's
significant operations outside of the United States, regional
instability and conflict that could disrupt tourist travel and
local consumer spending, weakening foreign currencies, changes in
the Company's product or geographic sales mix and changes in costs
or reduced supply availability of diamonds and precious metals.
Please also see the Company's risk factors, as they may be amended
from time to time, set forth in the Company's filings with the
Securities and Exchange Commission, including the Company’s most
recently filed Annual Report on Form 10-K and Quarterly Report on
Form 10-Q, for a discussion of these and other factors that could
cause actual results to differ materially. The Company undertakes
no obligation to update or revise any forward-looking statements to
reflect subsequent events or circumstances, except as required by
applicable law or regulation.
TIFFANY & CO. AND SUBSIDIARIES
(Unaudited)
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. The
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”). 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 sales
percentage increases (decreases) from the GAAP to the non-GAAP
basis versus the previous year:
Two Months Ended December 31, 2015 Eleven Months
Ended December 31, 2015 GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
GAAP
Reported
Translation
Effect
Constant-
Exchange-
Rate Basis
Net
Sales:
Worldwide (6 )% (3 )% (3 )% (3 )% (5 )% 2 % Americas (7 ) (2 ) (5 )
(4 ) (2 ) (2 ) Asia-Pacific (11 ) (5 ) (6 ) (2 ) (5 ) 3 Japan 9 (3
) 12 (3 ) (13 ) 10 Europe (4 ) (8 ) 4 (1 ) (14 ) 13 Other (20 ) (4
) (16 ) (15 ) (6 ) (9 )
Comparable Store
Sales:
Worldwide (9 )% (4 )% (5 )% (6 )% (6 )% — % Americas (10 ) (2 ) (8
) (6 ) (3 ) (3 ) Asia-Pacific (14 ) (5 ) (9 ) (5 ) (6 ) 1 Japan 6
(4 ) 10 (8 ) (13 ) 5 Europe (10 ) (8 ) (2 ) (4 ) (13 ) 9 Other (18
) (6 ) (12 ) (12 ) (9 ) (3 )
TIF-E
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TIFFANY & CO.Mark L. Aaron, 212-230-5301mark.aaron@tiffany.com
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