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Tiffany Reports Holiday Season Results; Sales Down 21% from Prior Year

14 january 2009

Tiffany & Co. (NYSE: TIF) today reported worldwide sales results for the November-December 2008 holiday period. As expected, sales declined most significantly in Tiffany's U.S. stores and to a lesser degree in Asia-Pacific and Europe. Results are based on unaudited sales. 
Worldwide net sales in the holiday period declined 21% to $687.4 million, from $867.3 million a year ago. 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 and comparable store sales declined 20% and 24%. 
Michael J. Kowalski, chairman and chief executive officer, said, "Deteriorating global economic conditions were clearly reflected in cautious spending by Tiffany customers across the entire range of jewelry categories and price points. We believe these conditions will continue well into 2009. Nevertheless, we are committed to maintaining healthy profitability and are reviewing all elements of our cost structure." 
Net sales by segment were as follows:
In the Americas, sales of $385.9 million in the holiday period were 30% lower than a year ago. Comparable U.S. store sales decreased 35% with similar declines experienced in the New York flagship store and across the branch stores. Combined Internet and catalog sales in the U.S. declined 21%. Sales in local currencies rose in Tiffany's stores in Canada and declined in Latin America.
In Asia-Pacific, sales declined 2% to $216.0 million in the holiday period. On a constant-exchange-rate basis, sales and comparable store sales declined 8% and 13% in the holiday period. Sales softened progressively in many countries over the course of the holiday period. 
In Europe, sales decreased 4% to $79.2 million in the holiday period. On a constant-exchange-rate basis, a 19% sales increase included a 3% comparable store sales decline and incremental sales from new stores.
The Company operated 206 TIFFANY & CO. stores and boutiques at December 31, 2008 (86 in the Americas, 96 in Asia-Pacific and 24 in Europe), versus 185 locations a year ago (81 in the Americas, 87 in Asia-Pacific and 17 in Europe).
Other sales decreased 53% to $6.3 million in the holiday period primarily due to reduced wholesale sales of diamonds.
Mr. Kowalski added that, "The holiday season represents the largest portion of fourth quarter sales, so we do not expect any improvement for the quarter that will end on January 31st. Based on that, net earnings will decline in the fourth quarter. For the full year, we expect net sales of approximately $2.85 billion and net earnings of $2.25 - $2.30 per diluted share. These estimates do not include any one-time charges in the fourth quarter related to the Company's previously-announced early retirement program or other charges that will be incurred to align Tiffany's on-going cost structure with the anticipated retail environment for luxury goods. We will quantify the annual savings to be realized from such cost reductions when we report full year results in March; we will provide sales and earnings estimates for 2009 at that time."
"While we are taking a cautious approach to planning our business for 2009, we will also continue to prudently pursue growth opportunities to further strengthen Tiffany's global presence and increase sales over the longer-term," he concluded.