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TIFFANY reports its third quarter results
26
Nov '09
Tiffany & Co. reported higher-than-expected net sales of $598 million and net earnings from continuing operations of $0.34 per diluted share in its third quarter that ended October 31, 2009. Management raised its sales and earnings outlook for the full year.

Net sales of $598.2 million in the third quarter were 3% below the prior year. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales declined 5% and comparable store sales declined 6% (see attached "Non-GAAP Measures" schedule).

In the nine months (year-to-date) ended October 31, 2009, net sales of $1.728 billion were 14% below the prior year. On a constant-exchange-rate basis, net sales and comparable store sales declined 13% and 15%.

Michael J. Kowalski, chairman and chief executive officer, said, "We were pleased to see that the rate of sales declines in the U.S. lessened as the quarter progressed. At the same time, many countries in Asia-Pacific and Europe achieved considerably better-than-expected sales. These results, combined with ongoing expense restraint, contributed to earnings above our prior expectation."

Net earnings from continuing operations in the third quarter were $43.3 million, or $0.34 per diluted share. This includes a $4.0 million charge related to a diamond sourcing agreement and a $5.6 million tax benefit which, together, were a benefit to net earnings from continuing operations of $0.01 per diluted share. Net earnings were $43.3 million, or $0.35 per diluted share.

In the prior year's third quarter, net earnings from continuing operations were $45.6 million, or $0.36 per diluted share.This included a $4.3 million pre-tax charge, or $0.03 per diluted share, related to a write-off (see Interest and Other expenses, net). Net earnings were $43.8 million, or $0.35 per diluted share.

In the 2009 year-to-date, net earnings from continuing operations were $127.5 million, or $1.02 per diluted share. This included $11.2 million of tax benefits; non-recurring income of $4.4 million related to a loan recovery; and a $4.0 million charge related to a diamond sourcing agreement; these three items together were a benefit of $0.08 per diluted share. Net earnings were $124.5 million, or $1.00 per diluted share.

In the first nine months of 2008, net earnings from continuing operations were $194.7 million, or $1.53 per diluted share, and net earnings were $188.9 million, or $1.49 per diluted share.This included the above-mentioned $4.3 million pre-tax charge related to a write-off.

Financial results for the Iridesse subsidiary are classified as discontinued operations in the statement of earnings for the current and prior year periods. This change in classification began in the second quarter of 2009.

Net sales by segment were as follows:
- In the Americas, sales of $303.5 million in the third quarter and $887.4 million in the year-to-date were 9% and 21% below prior year levels. Comparable U.S. store sales declined 10% in the third quarter (declined 5% in the month of October) and 25% in the year-to-date. Sales in the New York flagship store declined 8% and 27% while comparable U.S. branch store sales declined 11% and 24%. During the quarter, the Company opened stores in Roseville, CA and Seattle, WA. Combined Internet and catalog sales in the U.S. declined 9% and 11% in the quarter and year-to-date.


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