TIFFANY'S SECOND QUARTER EARNINGS MEET EXPECTATIONS
NEW YORK, August 16, 2001 - Tiffany & Co. (NYSE-TIF) reported that net sales of $371,301,000 in the second quarter ended July 31, 2001 were 1 percent lower than $374,448,000 a year ago. Net earnings declined 8 percent to $36,052,000, or 24 cents per diluted share, compared with $39,165,000, or 26 cents per diluted share, a year ago. Net sales and net earnings increased 21 percent and 70 percent, respectively, in the second quarter of 2000.
Second quarter U.S. comparable store sales declined 4 percent, in line with guidance provided in the Company's July 10th press release. Worldwide, on a constant-exchange-rate basis, which excludes the effect of translating local-currency-denominated sales into U.S. dollars, Tiffany's net sales rose 4 percent and comparable store sales rose fractionally.
For the six months (first half) ended July 31st, net sales of $707,702,000 were 2 percent below $719,591,000 a year ago. Net earnings of $66,814,000, or 44 cents per diluted share, were 4 percent below $69,590,000, or 46 cents per diluted share, in the prior year.
Michael J. Kowalski, president and chief executive officer, said, "The current retail environment in the U.S. and certain international markets contrasts sharply with favorable conditions a year ago. The impact on our short-term results is certainly not surprising, and we remain confident in the inherent strength and potential of Tiffany's underlying business."
Results in Tiffany's three channels of distribution were as follows:
U.S. Retail sales declined 1 percent to $186,163,000 in the second quarter and 4 percent to $345,175,000 in the first half, due to comparable store sales declines of 4 percent in the quarter and 6 percent in the half. Second quarter and first half comparable store sales in Tiffany's flagship New York store declined 6 percent and 11 percent, while U.S. branch stores declined 3 percent and 4 percent. Results reflected a lower level of customer spending per transaction that offset a greater number of transactions. In 2000, U.S. comparable store sales increased 19 percent in the second quarter and 23 percent in the first half.
International Retail sales declined 2 percent to $150,574,000 in the second quarter and 1 percent to $296,997,000 in the first half. On a constant-exchange-rate basis, International Retail sales increased 9 percent in both the second quarter and first half. Comparable store sales in the second quarter and first half rose 6 percent in both periods in Japan, 3 percent and 2 percent in other Asia-Pacific markets and 17 percent and 15 percent in Europe on a constant-exchange-rate basis.
Direct Marketing sales rose 6 percent in the second quarter to $34,564,000 and 8 percent to $65,530,000 in the first half. Sales in the second quarter and first half declined 5 percent and rose 2 percent in Tiffany's corporate division, while combined catalog/Internet sales rose 18 percent and 17 percent in those periods.
Mr. Kowalski added, "Tiffany's extraordinary product selection is appreciated by growing numbers of customers in existing and new markets. Store expansion in the first half of 2001 included the opening of new locations in San Jose, Melbourne, Sao Paolo and Japan (three boutiques). In the second half of the year, new locations are planned to open in Tampa, Rome, London (a third location) and Tokyo (one boutique). Merchandising initiatives include introducing an exciting assortment of new product designs. Our long-term success will continue to be driven by a disciplined approach toward executing our business plan and will not be affected by short-term cycles.
"There is widespread uncertainty about the timing and magnitude of a global economic recovery. While the first two weeks of August indicate a continuation of recent sales trends in the U.S. and some improvement in Japan, we assume that current economic conditions will improve more gradually than originally anticipated. Based on that revised assumption and an approximate continuation of second quarter sales and margin trends, we now expect that third quarter earnings per diluted share will be in a range of 22 - 24 cents, versus 24 cents in the prior year. For the fourth quarter, we now expect that, based on modestly improving U.S. comparable store sales trends, earnings will increase to a range of 60 - 65 cents per diluted share, versus 56 cents last year. This would result in full year earnings equal to, or slightly above, the prior year and we expect further gradual acceleration throughout 2002," Mr. Kowalski concluded.
Tiffany & Co. is the internationally renowned jeweler and specialty retailer. Sales are made primarily through TIFFANY & CO. stores and boutiques in the Americas, Asia-Pacific, Europe and the Middle East. Direct Marketing includes Tiffany's corporate division, catalog and Internet sales. Additional information can be found on Tiffany's Web site, www.tiffany.com, and on its shareholder information line (800) TIF-0110.
