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RAPAPORT... Tiffany & Co. reported before the opening bell on Wednesday that its worldwide sales fell 21 percent to $687.4 million in the final two months of 2008 as the weak economy in the U.S. weighed on company sales. Sales were down 20 percent on a constant-exchange-rate basis, while same-store sales decreased 24 percent for the period.
Tiffany reported that its sales in the Americas declined 30 percent to $385.9 million, led by a 35 percent drop in comparable store sales across the U.S. A similar sales decline was experienced at the company’s flagship New York store. In the Asia-Pacific region, sales fell 2 percent to $216 million, and on a constant-exchange-rate basis sales were down 8 percent. In Europe, sales declined 4 percent to $79.2 million but rose 19 percent on a constant-exchange-rate basis, with a comparable store sales drop of 3 percent. Sales in other regions decreased 53 percent to $6.3 million in November and December, “primarily due to reduced wholesale sales of diamonds,” Tiffany explained.
This was Tiffany's second consecutive tough Christmas season. In November and December 2007, same-store sales fell 2 percent as recessionary pressures began to impact consumer spending, especially for Tiffany products with price tags above $50,000. The drop in tourism to New York -- since the record year in 2006 -- may have also hurt Tiffany’s flagship sales. The number of foreign visitors to New York in the fourth quarter of 2008 fell 5.1 percent to 10.2 million, according to estimates by the Manhattan Institute. This Christmas season, sales declines were so widespread across the U.S. in all price categories that Tiffany stated during a call with analysts this morning that it was the worst Christmas in 21 years of being a public company.
Michael Kowalski, Tiffany's chief executive officer (CEO), said in a statement, “We believe these conditions will continue well into 2009.” Given the sales declines, Kowalski expects net earnings for the fourth quarter ending January 31, 2009 to drop. For the full year, Tiffany expects net sales of approximately $2.85 billion and net earnings of $2.25 to $2.30 per diluted share. Tiffany shares were down 35 percent from one year ago on Wednesday, to $22.
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