Delaware
(State or other jurisdiction
of incorporation)
|
1-9494
(Commission
File Number)
|
13-3228013
(I.R.S. Employer Identification No.)
|
727 Fifth Avenue, New York, New York
(Address of principal executive offices)
|
10022
(Zip Code)
|
TIFFANY & CO. | |
BY: | /s/ Patrick B. Dorsey |
Patrick B. Dorsey | |
Senior Vice President, Secretary and | |
General Counsel |
·
|
Worldwide net sales of $887 million were 2% above the prior year. On a constant-exchange-rate basis that excludes the effect of translating foreign-currency-denominated sales into U.S. dollars (see “Non-GAAP Measures” schedule), worldwide net sales increased 3% and comparable store sales declined 1%.
|
·
|
Net earnings rose 2% to $92 million, or $0.72 per diluted share, versus $90 million, or $0.69 per diluted share, in 2011’s second quarter.
|
·
|
Net earnings in the second quarter of 2011 had been reduced by $21 million, or $0.16 per diluted share, for nonrecurring items related to the relocation of Tiffany’s New York headquarters staff (see “Non-GAAP Measures” schedule). Excluding those costs, net earnings in the second quarter declined 17% from 2011’s second quarter.
|
·
|
Worldwide net sales increased 4% to $1.7 billion. On a constant-exchange-rate basis, worldwide net sales and comparable store sales rose 5% and 1% respectively.
|
·
|
Net earnings increased 1% to $173 million, or $1.36 per diluted share, from $171 million, or $1.32 per diluted share, a year ago.
|
·
|
Net earnings in the first half of 2011 had been reduced by $26 million, or $0.20 per diluted share, for nonrecurring items related to the headquarters staff relocation. Excluding those costs, net earnings in the first half were 12% below the prior year.
|
·
|
Sales in the Americas region declined 1% to $434 million in the second quarter and rose 1% to $820 million in the first half. On a constant-exchange-rate basis, total sales were unchanged in the quarter and rose 2% in the half; on that basis, comparable store sales declined 5% in the second quarter and 3% in the first half (sales declined 9% and 7% in the New York flagship store while comparable branch store sales declined 4% and 2%). In last year’s second quarter, comparable store sales on a constant-exchange-rate basis had increased 41% in the New York flagship store and 19% in branch stores. Combined Internet and catalog sales in the Americas rose 3% in the second quarter (on top of a 16% increase last year) and 2% in the first half.
|
·
|
In the Asia-Pacific region, total sales rose 1% to $174 million in the second quarter and 8% to $369 million in the first half. On a constant-exchange-rate basis, total sales increased 3% and 9% in the quarter and half, while comparable store sales declined 5% in the quarter (on top of a 41% increase last year) and rose 2% in the half, due to mixed performance across the region.
|
·
|
In Japan, total sales increased 11% to $159 million in the second quarter and 13% to $300 million in the first half. On a constant-exchange-rate basis, both total sales and comparable store sales rose 10% in the quarter and increased 11% in the half; comparable store sales had increased 8% in last year’s second quarter.
|
·
|
Sales in Europe declined 1% to $100 million in the second quarter and increased 1% to $188 million in the first half. On a constant-exchange-rate basis, total sales increased 8% in both the quarter and first half; comparable store sales increased 2% in the quarter (sales growth in overall continental Europe was mostly offset by relative softness in the U.K.) on top of an 11% increase last year, and rose 1% in the half.
|
·
|
Other sales increased 12% to $20 million in the second quarter. During the quarter, five TIFFANY & CO. stores in the United Arab Emirates (three in Dubai and two in Abu Dhabi) were converted from independently-operated distribution to Company-operated retail stores. Other sales rose 3% to $28 million in the first half.
|
·
|
The Company added nine stores in the second quarter: in Mexico City, in Shanghai and Nanjing, China and in Nice, France, and commenced operation of the five stores in the U.A.E. At July 31, 2012, the Company operated 260 stores (106 in the Americas, 61 in Asia-Pacific, 55 in Japan, 33 in Europe and five in the U.A.E.), compared with 236 stores (98 in the Americas, 52 in Asia-Pacific, 55 in Japan and 31 in Europe) a year ago.
|
·
|
Gross margin (gross profit as a percentage of net sales) was 56.3% in the second quarter and 56.8% in the first half, compared with 59.0% and 58.7% in the respective 2011 periods. The year-over-year declines largely resulted from higher product acquisition costs, as well as reduced sales leverage on fixed costs.
|
·
|
SG&A (selling, general and administrative) expenses declined 8% in the second quarter, and in the first half were approximately equal to the prior year. However, excluding nonrecurring costs related to the relocation of Tiffany’s New York headquarters staff in 2011’s second quarter, SG&A expenses increased 1% in the quarter due to higher store occupancy costs mostly offset by the timing of marketing spending, and rose 6% in the half due to higher store occupancy and labor costs.
|
·
|
Other expenses, net of $14.3 million in the second quarter were higher than $9.6 million in the prior year, with the largest portion of the increase related to higher interest expense. Other expenses, net of $24.8 million in the first half compared with $19.8 million in the prior year.
|
·
|
The effective income tax rate was 34.6% in the second quarter, versus 31.2% a year ago when the Company had reversed a valuation allowance against certain deferred tax assets. The effective rate was 34.5% in the first half, versus 33.4% a year ago.
|
·
|
Cash and cash equivalents and short-term investments totaled $367 million at July 31, 2012, versus $565 million a year ago. Short-term and long-term debt totaled $940 million at July 31, 2012 and represented 39% of stockholders’ equity, compared with $694 million and 29% a year ago. During the second quarter, the Company issued $250 million of Senior Notes with a 4.40% coupon and principal payments due over a 10 to 30-year period. A portion of the proceeds was used to repay in full $60 million of 6.56% Senior Notes that matured in July and the remainder is for general corporate purposes including initially reducing short-term indebtedness under the revolving credit facility.
|
·
|
Net inventories of $2.2 billion at July 31, 2012 were 21% higher than a year ago, due to approximately equal rates of growth in both finished goods and in combined raw material and work-in-process inventories. This reflected higher product acquisition costs, new store openings, growth in rough diamond sourcing and internal manufacturing, and expanded product assortments.
|
a)
|
Worldwide net sales (in U.S. dollars) increasing 6-7% versus the previous expectation calling for 7-8% growth, due to a moderation in assumed fourth quarter sales growth.
|
b)
|
Adding a total of 28 Company-operated stores including 13 in the Americas, eight in Asia-Pacific, two in Europe, and commencing operation of five stores in the United Arab Emirates. This includes 13 stores that were already added in the first half of the year.
|
c)
|
The operating margin below the 20.6% achieved in 2011 (excluding nonrecurring costs) due to a decline in the gross margin.
|
d)
|
Interest and other expenses, net of approximately $52-54 million.
|
e)
|
An effective income tax rate of 34-35%.
|
f)
|
In addition, management expects net inventories to increase 10% in the full year, unchanged from the previous forecast, and expects capital expenditures of $230 million, versus a previous forecast of $240 million.
|
Second Quarter 2012 vs. 2011
|
First Half 2012 vs. 2011
|
|||||
GAAP
Reported
|
Translation
Effect
|
Constant-
Exchange-Rate
Basis
|
GAAP
Reported
|
Translation
Effect
|
Constant-
Exchange-Rate
Basis
|
|
Net Sales:
|
||||||
Worldwide
|
2 %
|
(1)%
|
3 %
|
4 %
|
(1)%
|
5 %
|
Americas
|
(1)%
|
(1)%
|
–
|
1 %
|
(1)%
|
2 %
|
Asia-Pacific
|
1 %
|
(2)%
|
3 %
|
8 %
|
(1)%
|
9 %
|
Japan
|
11 %
|
1 %
|
10 %
|
13 %
|
2 %
|
11 %
|
Europe
|
(1)%
|
(9)%
|
8 %
|
1 %
|
(7)%
|
8 %
|
Comparable Store Sales:
|
||||||
Worldwide
|
(3)%
|
(2)%
|
(1)%
|
–
|
(1)%
|
1 %
|
Americas
|
(5)%
|
–
|
(5)%
|
(3)%
|
–
|
(3)%
|
Asia-Pacific
|
(7)%
|
(2)%
|
(5)%
|
2 %
|
–
|
2 %
|
Japan
|
12 %
|
2 %
|
10 %
|
13 %
|
2 %
|
11 %
|
Europe
|
(7)%
|
(9)%
|
2 %
|
(6)%
|
(7)%
|
1 %
|
Three Months Ended
July 31, 2012
|
Three Months Ended
July 31, 2011
|
|||
(in thousands, except per share amounts)
|
$
(after tax)
|
Diluted
EPS
|
$
(after tax)
|
Diluted
EPS
|
Net earnings, as reported
|
$ 91,801
|
$ 0.72
|
$ 90,043
|
$ 0.69
|
Headquarters relocation a
|
—
|
—
|
20,991
|
0.16
|
Net earnings, as adjusted
|
$ 91,801
|
$ 0.72
|
$ 111,034
|
$ 0.86
|
Six Months Ended
July 31, 2012
|
Six Months Ended
July 31, 2011
|
|||
(in thousands, except per share amounts)
|
$
(after tax)
|
Diluted
EPS
|
$
(after tax)
|
Diluted
EPS
|
Net earnings, as reported
|
$ 173,335
|
$ 1.36
|
$ 171,106
|
$ 1.32
|
Headquarters relocation a
|
—
|
—
|
25,994
|
0.20
|
Net earnings, as adjusted
|
$ 173,335
|
$ 1.36
|
$ 197,100
|
$ 1.52
|
|
|||||||||
|
|
||||||||
Three Months Ended July 31,
|
Six Months Ended July 31,
|
||||||||
2012
|
2011
|
2012
|
2011
|
||||||
Net sales
|
$
|
886,569
|
$
|
872,712
|
$
|
1,705,739
|
$
|
1,633,730
|
|
Cost of sales
|
387,407
|
358,015
|
737,559
|
675,340
|
|||||
Gross profit
|
499,162
|
514,697
|
968,180
|
958,390
|
|||||
Selling, general and administrative expenses
|
344,582
|
374,157
|
678,615
|
681,884
|
|||||
Earnings from operations
|
154,580
|
140,540
|
289,565
|
276,506
|
|||||
Interest and other expenses, net
|
14,250
|
9,619
|
24,804
|
19,766
|
|||||
Earnings from operations before income taxes
|
140,330
|
130,921
|
264,761
|
256,740
|
|||||
Provision for income taxes
|
48,529
|
40,878
|
91,426
|
85,634
|
|||||
Net earnings
|
$
|
91,801
|
$
|
90,043
|
$
|
173,335
|
$
|
171,106
|
|
Net earnings per share:
|
|||||||||
Basic
|
$
|
0.72
|
$
|
0.70
|
$
|
1.37
|
$
|
1.34
|
|
Diluted
|
$
|
0.72
|
$
|
0.69
|
$
|
1.36
|
$
|
1.32
|
|
Weighted-average number of common shares:
|
|||||||||
|
|
||||||||
Basic
|
126,631
|
128,030
|
126,677
|
127,816
|
|||||
Diluted
|
127,663
|
129,794
|
127,920
|
129,587
|
|||||
|
|||||||||
|
July 31,
|
|
January 31,
|
|
July 31,
|
|||
2012
|
2012
|
2011
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents and short-term investments
|
$
|
367,437
|
$
|
442,190
|
$
|
565,191
|
||
Accounts receivable, net
|
171,463
|
184,085
|
182,001
|
|||||
Inventories, net
|
2,230,474
|
2,073,212
|
1,836,874
|
|||||
Deferred income taxes
|
105,212
|
83,124
|
67,964
|
|||||
Prepaid expenses and other current assets
|
130,128
|
107,064
|
115,474
|
|||||
Total current assets
|
3,004,714
|
2,889,675
|
2,767,504
|
|||||
Property, plant and equipment, net
|
777,387
|
767,174
|
738,172
|
|||||
Other assets, net
|
542,645
|
502,143
|
425,212
|
|||||
$
|
4,324,746
|
$
|
4,158,992
|
$
|
3,930,888
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Short-term borrowings
|
$
|
155,137
|
$
|
112,973
|
$
|
97,272
|
||
Current portion of long-term debt
|
0
|
60,822
|
61,728
|
|||||
Accounts payable and accrued liabilities
|
259,608
|
328,962
|
274,301
|
|||||
Income taxes payable
|
26,901
|
60,977
|
20,687
|
|||||
Merchandise and other customer credits
|
63,112
|
62,943
|
66,764
|
|||||
Total current liabilities
|
504,758
|
626,677
|
520,752
|
|||||
Long-term debt
|
784,409
|
538,352
|
534,673
|
|||||
Pension/postretirement benefit obligations
|
316,319
|
338,564
|
205,298
|
|||||
Other long-term liabilities
|
198,176
|
186,802
|
193,256
|
|||||
Deferred gains on sale-leasebacks
|
112,285
|
119,692
|
125,173
|
|||||
Stockholders' equity
|
2,408,799
|
2,348,905
|
2,351,736
|
|||||
|
|
|
||||||
$
|
4,324,746
|
$
|
4,158,992
|
$
|
3,930,888
|
|||