Tiffany Reports Fourth Quarter & Annual Results Monday March 24, 7:00 am ET
NEW YORK--(BUSINESS WIRE)--Tiffany & Co. (NYSE: TIF - News) reported today that its net sales increased 15% in the fiscal year ended January 31, 2008 and rose 10% in the fourth quarter. Net earnings per diluted share from continuing operations excluding non-recurring items (see attached “Non-GAAP Measures” schedule) increased 22% to $2.33 in the year and increased 19% to $1.27 in the fourth quarter.
Net sales in the fiscal year increased 15% to $2,938,771,000. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars (see attached “Non-GAAP Measures” schedule), net sales increased 13% and worldwide comparable store sales increased 7%.
Net sales in the fourth quarter rose 10% to $1,053,157,000. On a constant-exchange-rate basis, net sales increased 7% due to incremental sales from newly-opened stores and a 1% increase in worldwide comparable store sales.
Net earnings in the fiscal year increased 20% to $303,772,000, or $2.20 per diluted share, compared with $253,927,000, or $1.80 per diluted share. Earnings in the current year were affected by several one-time items noted below.
Net earnings in the fourth quarter declined 16% to $118,250,000, or $0.89 per diluted share, from $140,499,000, or $1.02 per diluted share, in the prior year. Earnings in the current year were adversely affected by several one-time items noted below.
The following one-time items affected earnings in the quarter and/or the year:
(i) In the fourth quarter, the Company recorded a pre-tax charge of $19,212,000, or $0.09 per diluted share after tax, in cost of sales; this charge was for product obsolescence related to management’s decision to discontinue certain watch models in anticipation of the start-up of its strategic alliance with The Swatch Group Ltd.
(ii) In the fourth quarter, the Company recorded a pre-tax impairment charge of $15,532,000, or $0.07 per diluted share after tax, in selling, general and administrative (“SG&A”) expenses; this charge resulted from lower-than-expected store performance and a related reduction in future cash flow projections associated with the Company’s IRIDESSE subsidiary.
(iii) In the fourth quarter, the Company recorded a pre-tax impairment charge of $47,981,000, or $0.22 per diluted share after tax, in SG&A expenses to reflect the expectation that loans made by the Company to Tahera Diamond Corporation (“Tahera”) will not be repaid. This charge represents the full amount of loans to Tahera, inclusive of accrued interest. In January 2008, Tahera sought judicial protection from creditors.
(iv) In the third quarter, the Company completed the sale-leaseback of the multi-tenant building housing its Tokyo flagship store for proceeds of $327,537,000. The Company recorded as other operating income a pre-tax gain of $105,051,000, or $0.48 per diluted share after tax; a deferred pre-tax gain of $75,244,000 will be amortized in SG&A expenses over the 15-year lease period. The Company contributed $10,000,000, or $0.04 per diluted share after tax, of the proceeds to The Tiffany & Co. Foundation.
(v) In the third quarter, the Company sold its Little Switzerland business for proceeds of $32,870,000. The Company’s full year pre-tax loss associated with Little Switzerland of $59,661,000, or $0.20 per diluted share after tax, included a pre-tax charge of $54,260,000, or $0.16 per diluted share after tax, tied to the sale. In the prior year, a full year loss associated with Little Switzerland of $15,873,000, or $0.11 per diluted share after tax, included a pre-tax charge of $6,893,000, or $0.05 per diluted share after tax, in the fourth quarter related to the impairment of total goodwill. In both years, these results are recorded in losses from discontinued operations.