This is a summary of the fourth quarter fiscal 2008 earnings call as presented by Tiffany & Co. (TIF) on March 23, 2009.
Management
Chairman and CEO: Mike Kowalski
CFO and EVP: Jim Fernandez
VP, IR: Mark Aaron
Key Investors Issues
- Net earnings of a $1.74 per diluted share were 26% lower than the $2.34 earned last year.
- Company stores and boutiques increased 12% in the number of location to 206 locations in 21 countries.
- Net sales of $2.86 billion in 2008 were 3% below the prior year.
Full Year Highlights
- The Company suspended its share repurchase program during the third quarter in order to conserve cash.
- Excluding various one-time items net earnings of $2.33 per diluted share in 2008 were 6% below the adjusted $2.47 earned in 2007.
- Sales in the US made to foreign tourists represented 16% of US store sales in 2008, versus 14% in 2007 and 11% in 2006.
Fourth Quarter Highlights
Tiffany''s world-wide net sales declined 20%.
- Excluding the effects from foreign currency translation, world-wide net sales declined 19%.
- The decline was due to a 23% decline in comparable store sales that included extreme softness in the US and sluggish trends in other region.
- In the Americas, sales declined 29%, which reflected difficult economic conditions in the US, as well as the impact from heavy price promoting by competitors.
Total retail sales in the US declined 31% and comp store sales declined 33%.
- On a monthly basis, US comps declined 39% in November, 33% in December and 23% in January.
- The softness was wide-spread and consistent, with comps down 33%, branch stores 35% and the nine store New York region and 34% in the New York flagship store.
- Most of the US sales decline came from a decrease in a number of transactions, but the remainder coming from customers spending less per transaction.
There were declines in every price strata in the period.
- But the declines were somewhat smaller in the sales below $500 and larger in the sales above $50,000.
- Despite the tough environment though, the Glendale store is generating a high levels of profitability relative to other new US stores.
- Tiffany & Co. finished the year with 76 stores in the US.
Internet and catalog: sales declined 20% on a combined basis.
- This is attributed to a lower number of orders shipped, while the average order size held steady.
- Tiffany & Co. continued to experience healthy local currency sales growth in Canada, including the strong ecommerce sales there, while sales were soft in Mexico and rose in Brazil.
Asia-Pacific region: total sales declined 3% to $279.7 million due to declines in several markets.
- However, on a constant exchange rate basis sales declined 9% and comp store sales dropped 13%.
Japan: total sales rose 4%.
- However, excluding the effects of the stronger yen versus a dollar, sales declined 13% in total and comps declined 16%.
- This is compared with a 6% comp declined last year and sales declined in all three months.
- There were similar comp declines within Tokyo and outside Tokyo.
Tiffany & Co. opened four department stores boutiques in 2008 in Japan.
- The firm now operates 57 locations throughout Japan.
In Asia-Pacific markets outside Japan: Local currency comps declined 9%.
- These are compared against a 28% increase in the same quarter of 2007.
- Sales in quarter ranged from strength in Australia, China, and Korea to softness in Hong Kong, Singapore, and Taiwan.
