Delaware | 1-9494 | 13-3228013 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
200 Fifth Avenue, New York, New York | 10010 | |||
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
99.1 | News Release dated May 27, 2015. |
TIFFANY & CO. | ||
(Registrant) | ||
By: /s/ Leigh M. Harlan | ||
Leigh M. Harlan | ||
Senior Vice President, Secretary | ||
and General Counsel | ||
Date: May 27, 2015 |
Exhibit No. | Description |
99.1 | News Release dated May 27, 2015. |
Fifth Avenue & 57th Street | Contact: | |||
New York, N.Y. 10022 | Mark L. Aaron | |||
212-230-5301 | ||||
mark.aaron@tiffany.com |
• | Worldwide net sales of $962 million were 5% below the prior year. However, on a constant-exchange-rate basis excluding the effect of translating foreign-currency-denominated sales into U.S. dollars (see “Non-GAAP Measures” schedule), worldwide net sales rose 1% due to growth in all regions except Japan and driven by increased sales of fashion gold jewelry and statement jewelry; worldwide comparable store sales on that basis were 1% below last year. |
• | Net earnings declined 17% to $105 million, or $0.81 per diluted share, compared with $126 million, or $0.97 per diluted share, a year ago, due to the lower sales as well as higher SG&A (selling, general and administrative) expenses primarily related to marketing spending. |
• | In the Americas, on a constant-exchange-rate basis total sales rose 3% and comparable store sales were 1% above the prior year. This reflected higher sales to U.S. customers offset by lower foreign tourist spending in the U.S. which management attributes to the strong U.S. dollar, as well as healthy sales growth in Canada and Latin America. As reported in U.S. dollars, total sales rose 1% to $444 million. |
• | In the Asia-Pacific region, sales on a constant-exchange-rate basis increased 4% in total and 2% on a comparable store basis. There was noteworthy sales growth in China, Australia and Singapore, but meaningful sales declines in Hong Kong and Macau. As reported in U.S. dollars, total sales declined 1% to $259 million. |
• | In Japan, on a constant-exchange-rate basis total sales declined 18% and comparable store sales declined 24%. However, the declines reflected difficult comparisons to strong growth in last year’s first quarter when comparable store sales had surged 30% due to consumer demand prior to an increase in Japan’s consumption tax on April 1, 2014. As reported in U.S. dollars, total sales in Japan declined 30% to $122 million. |
• | In Europe, on a constant-exchange-rate basis total sales increased 21% and comparable store sales increased 17% due to growth across continental Europe reflecting robust spending by foreign tourists as well as higher sales to local customers. As reported in U.S. dollars, total sales in Europe increased 2% to $103 million. |
• | Other sales on a constant-exchange-rate basis rose 1% and comparable store sales on that same basis were unchanged from the prior year. As reported in U.S. dollars, Other sales declined 6% to $35 million. |
• | Tiffany opened three Company-operated stores in the first quarter: two in China in Shanghai and Hangzhou and one in the U.S. in Miami. At April 30, 2015, the Company operated 298 stores (123 in the Americas, 75 in Asia-Pacific, 56 in Japan, 38 in Europe, and included in Other sales are five in the United Arab Emirates and one in Russia), versus 292 stores a year |
• | Gross margin (gross profit as a percentage of net sales) increased to 59.1% from 58.2% in last year’s first quarter. The change reflected benefits from favorable product input costs and price increases, as well as the absence of a one-time charge in the first quarter of 2014 for the closing of a diamond polishing facility. These benefits were somewhat mitigated by a negative effect from geographical sales mix. |
• | SG&A expenses increased 5%, largely due to higher marketing expenses as well as incremental expenses related to the Company’s U.S. pension and postretirement plans. The rate of overall SG&A expense growth was halved by the translation effect of the strong U.S. dollar. |
• | Interest and other expenses, net declined to $9 million from $16 million in last year’s first quarter. The decline was partly due to lower interest expense resulting from the redemption of long-term debt in October 2014 by using proceeds from the issuance of lower-rate long-term debt. To a lesser extent, interest and other expenses, net declined due to changes in foreign currency transaction gains/losses. |
• | The effective tax rate was 34.7%, compared with 35.1% in last year’s first quarter. |
• | Cash and cash equivalents and short-term investments were $715 million at April 30, 2015, compared with $381 million a year ago. Total short-term and long-term debt as a percentage of stockholders’ equity was 37% and 35% at April 30, 2015 and 2014, respectively. |
• | Net inventories of approximately $2.4 billion at April 30, 2015 were 2% lower than the prior year, but increased 2% excluding the translation effect of the strong U.S. dollar in support of new stores and product introductions. |
• | Capital expenditures were $37 million, versus $35 million in last year’s first quarter. |
• | The Company spent $33 million in the first quarter to repurchase approximately 380,000 shares of its common stock at an average cost of $87.16 per share. At April 30th, |
First Quarter 2015 vs. 2014 | |||||
GAAP Reported | Translation Effect | Constant- Exchange- Rate Basis | |||
Net Sales: | |||||
Worldwide | (5)% | (6)% | 1% | ||
Americas | 1% | (2)% | 3% | ||
Asia-Pacific | (1)% | (5)% | 4% | ||
Japan | (30)% | (12)% | (18)% | ||
Europe | 2% | (19)% | 21% | ||
Other | (6)% | (7)% | 1% | ||
Comparable Store Sales: | |||||
Worldwide | (7)% | (6)% | (1)% | ||
Americas | (1)% | (2)% | 1% | ||
Asia-Pacific | (2)% | (4)% | 2% | ||
Japan | (35)% | (11)% | (24)% | ||
Europe | (2)% | (19)% | 17% | ||
Other | (8)% | (8)% | —% |
Three Months Ended April 30, | |||||||
2015 | 2014 | ||||||
Net sales | $ | 962.4 | $ | 1,012.1 | |||
Cost of sales | 393.4 | 422.6 | |||||
Gross profit | 569.0 | 589.5 | |||||
Selling, general and administrative expenses | 399.0 | 379.7 | |||||
Earnings from operations | 170.0 | 209.8 | |||||
Interest and other expenses, net | 9.3 | 16.3 | |||||
Earnings from operations before income taxes | 160.7 | 193.5 | |||||
Provision for income taxes | 55.8 | 67.9 | |||||
Net earnings | $ | 104.9 | $ | 125.6 | |||
Net earnings per share: | |||||||
Basic | $ | 0.81 | $ | 0.97 | |||
Diluted | $ | 0.81 | $ | 0.97 | |||
Weighted-average number of common shares: | |||||||
Basic | 129.2 | 128.9 | |||||
Diluted | 129.8 | 129.8 |
April 30, 2015 | January 31, 2015 | April 30, 2014 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents and short-term investments | $ | 715.4 | $ | 731.5 | $ | 381.2 | |||||
Accounts receivable, net | 192.5 | 195.2 | 194.6 | ||||||||
Inventories, net | 2,363.0 | 2,362.1 | 2,418.4 | ||||||||
Deferred income taxes | 101.5 | 102.6 | 102.3 | ||||||||
Prepaid expenses and other current assets | 207.6 | 220.0 | 236.8 | ||||||||
Total current assets | 3,580.0 | 3,611.4 | 3,333.3 | ||||||||
Property, plant and equipment, net | 897.0 | 899.5 | 848.4 | ||||||||
Other assets, net | 673.0 | 669.7 | 643.8 | ||||||||
$ | 5,150.0 | $ | 5,180.6 | $ | 4,825.5 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term borrowings | $ | 197.1 | $ | 234.0 | $ | 241.0 | |||||
Accounts payable and accrued liabilities | 271.4 | 318.0 | 306.1 | ||||||||
Income taxes payable | 44.6 | 39.9 | 26.1 | ||||||||
Merchandise and other customer credits | 72.2 | 66.1 | 67.5 | ||||||||
Total current liabilities | 585.3 | 658.0 | 640.7 | ||||||||
Long-term debt | 882.1 | 882.5 | 750.8 | ||||||||
Pension/postretirement benefit obligations | 532.2 | 524.2 | 273.7 | ||||||||
Other long-term liabilities | 201.3 | 200.7 | 219.5 | ||||||||
Deferred gains on sale-leasebacks | 62.8 | 64.5 | 80.2 | ||||||||
Stockholders’ equity | 2,886.3 | 2,850.7 | 2,860.6 | ||||||||
$ | 5,150.0 | $ | 5,180.6 | $ | 4,825.5 |