TIF REPORTS SUBSTANTIALLY HIGHER-THAN-EXPECTED SALES & EARNINGS GROWTH IN 2Q
TIFFANY REPORTS SUBSTANTIALLY HIGHER-THAN-EXPECTED SALES AND EARNINGS GROWTH IN ITS SECOND QUARTER
NEW YORK--(August 26, 2011)-- Tiffany & Co. (NYSE: TIF) today announced its financial results for the second quarter ended July 31, 2011. Net sales rose 30% over the prior year due to strong growth in all geographic regions. Net earnings increased 33% and, excluding nonrecurring charges, rose 58% in the quarter (see attached "Non-GAAP Measures" schedule). Net earnings were $0.69 per diluted share in the quarter and, excluding nonrecurring charges, were $0.86 per diluted share. Management increased its earnings forecast for fiscal 2011 to reflect the better-than-expected second quarter results.
Michael J. Kowalski, chairman and chief executive officer, said, "We are extremely pleased by these results which confirm the growing global appeal of Tiffany's product offerings. In addition, we have been able to absorb precious metal and gemstone cost increases while improving our gross and operating margins."
Second quarter (three months ended July 31, 2011) summary:
Worldwide net sales rose 30% to $872.7 million. On a constant-exchange-rate basis excluding the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales increased 24% and comparable store sales rose 22% (see "Non-GAAP Measures" schedule). Net earnings increased 33% to $90.0 million, or $0.69 per diluted share, versus $67.7 million, or $0.53 per diluted share, in the prior year. Earnings in the second quarter of 2011 were reduced by $0.16 per diluted share for nonrecurring expenses (see SG&A expenses below) related to the relocation of Tiffany's New York headquarters staff. Earnings in the second quarter of 2010 were reduced by $0.02 per diluted share for similarly-related nonrecurring expenses. Excluding those nonrecurring items in both years, net earnings rose 58% in the quarter and were $0.86 per diluted share, versus $0.55 per diluted share in the prior year (see "Non-GAAP Measures" schedule). First half (six months ended July 31, 2011) summary:
Worldwide net sales rose 25% to $1.6 billion. On a constant-exchange-rate basis, worldwide net sales and comparable store sales rose 20% and 18%. Net earnings rose 30% to $171.1 million, or $1.32 per diluted share, compared with $132.1 million, or $1.03 per diluted share. Earnings in the first half of 2011 were reduced by $0.20 per diluted share for nonrecurring items. Excluding nonrecurring items in both years, net earnings rose 49% in the first half and were $1.52 per diluted share, versus $1.03 per diluted share in the prior year (see "Non-GAAP Measures" schedule). Net sales highlights by segment:
In the Americas, sales rose 25% to $438.2 million in the second quarter and 22% to $812.9 million in the first half. On a constant-exchange-rate basis, total sales and comparable store sales in the quarter rose 24% and 23% and in the first half rose 21% and 20% (in the quarter and first half, sales in the New York flagship store increased 41% and 33%, benefiting from strong foreign tourist demand, and comparable branch store sales in the Americas increased 19% and 17%). Internet and catalog sales in the Americas increased 16% and 15%. In Asia-Pacific, sales increased 55% to $173.2 million in the second quarter and 46% to $340.5 million in the first half. On a constant-exchange-rate basis, sales increased 45% and 38% and comparable store sales increased 41% and 33% due to growth in most countries with the largest increase in the greater China region.
TIFFANY & CO. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands)
July 31, 2011 January 31, 2011 July 31, 2010
Current assets: Cash and cash equivalents and short-term investments $ 565,191 $ 740,871 $ 614,674 Accounts receivable, net 182,001 185,969 156,708 Inventories, net 1,836,874 1,625,302 1,553,117 Deferred income taxes 67,964 41,826 16,114 Prepaid expenses and other current assets 115,474 90,577 76,780
Total current assets 2,767,504 2,684,545 2,417,393
Property, plant and equipment, net 738,172 665,588 661,387 Other assets, net 425,212 385,536 367,781
$ 3,930,888 $ 3,735,669 $ 3,446,561
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Short-term borrowings $ 97,272 $ 38,891 $ 44,221 Current portion of long-term debt 61,728 60,855 269,960 Accounts payable and accrued liabilities 274,301 258,611 165,757 Income taxes payable 20,687 55,691 16,198 Merchandise and other customer credits 66,764 65,865 60,546