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Tiffany 3Q Sales -1% but U.S. Rev. -9%, Net Earnings -58%

Nov 26, 2008 7:32 AM   By Jeff Miller
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RAPAPORT... Tiffany & Co.'s third-quarter net earnings fell 58 percent to $43.78 million. The company's worldwide revenues declined 1 percent to $618.23 million in the third quarter, as a 9 percent drop in sales across the U.S. was partially offset by stronger sales abroad. Sales across the Asia-Pacific region rose 3 percent to $206 million in the third quarter and sales across Europe rose 16 percent to $58.2 million.

At Tiffany's New York flagship store, same-store sales fell 5 percent, while comparable-store sales its other locations fell 16 percent in the third quarter. Comparable-store sales in the U.S. plunged by 14 percent, and worldwide same-store sales fell 7 percent. Internet and catalog sales combined fell 7 percent in the U.S.

Gross margin was 56.3 percent in the third quarter, compared with 54.4 percent one year ago. The increase was "due to favorable changes in product sales mix, the benefit of the company's precious-metal hedging program, and a reduction in anticipated management incentive compensation," Tiffany stated in its quarterly report. Other expenses, consisting of a net $14.5 million in the third quarter, were higher, largely due to a $4.3 million write-off of an interest-rate swap that Tiffany entered into with Lehman Brothers Special Financing Inc., in addition to foreign currency transaction losses.

Net inventories of $1.64 billion, as of October 31, 2008, were 12 percent higher than they were one year ago. This the company reported, was "due to increased raw material and work-in-process inventories related to diamond sourcing and manufacturing operations, inventories for new stores and the sales shortfall in the latter part of the quarter."

Total debt as a percentage of stockholders' equity was at a seasonal high of 50 percent on October 31, versus 23 percent one year ago.

Michael J. Kowalski, chairman and chief executive officer (CEO) of Tiffany's, said, "It is impossible to know when consumer confidence will be restored. However, even in trying times like these, we believe customers will continue to seek classic, timeless designs that do not go out of style and can be worn and enjoyed for years to come."

Management now expects net earnings for full-year 2008 to be in the range of $2.30 to $2.50 per diluted share. Tiffany is planning to reduce staffing in light of reduced consumer demand, and to trim capital expenditures in order to achieve the most effective and prudent use of resources.

Tiffany expects to report its results for the November-December holiday period on Wednesday, January 14, 2009.



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Tiffany earnings Plunge????
Nov 26, 2008 3:13PM    By Mike Glatiotis
You fail to point out that the 57% drop in earnings is only comparable to last year's quarter where there was a one time earnings gain from the significant sale of realestate in Tokyo.

Otherwise, earnings were UP.
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