Tiffany & Co. (NYSE: TIF) today reported its financial
results for the three months ended April 30, 2020 (“first
quarter”). Worldwide net sales as reported and on a
constant-exchange-rate basis that excludes the effect of
translating foreign-currency-denominated sales into U.S. dollars
(see “Non-GAAP Measures”) were below the prior year primarily as a
result of the temporary closures of a substantial number of the
Company’s stores around the world due to the COVID-19 pandemic.
Unlike calendar year-end companies, the Company’s first quarter
began February 1, meaning that the COVID-19 pandemic affected its
entire quarter. The significant decline in net sales resulted in a
net loss in the quarter.
In the first quarter:
- Worldwide net sales declined 45% to $556 million and comparable
sales declined 44%; on a constant-exchange-rate basis, net sales
declined by 44% as compared to the prior year and comparable sales
declined 43%. These sales declines reflected closures of Company
retail stores across all of its global markets at various times
during the first quarter of 2020 due to COVID-19.
- Net loss was $65 million, or $0.53 per share, for the first
quarter of 2020 compared to net income of $125 million, or $1.03
per diluted share, in the prior year. Excluding certain costs
recorded in the period related to the pending acquisition of the
Company (the “Merger”) by LVMH Moët Hennessy - Louis Vuitton SE
(“LVMH”), pursuant to the Agreement and Plan of Merger, dated as of
November 24, 2019 (the “Merger Agreement”) by and among the
Company, LVMH, Breakfast Holdings Acquisition Corp. and Breakfast
Acquisition Corp., as well as certain other non-recurring items,
first quarter net loss was $64 million, or $0.53 per share (see
“Non-GAAP Measures”).
- On June 8, 2020, as a precautionary measure in order to
maintain flexibility with respect to its liquidity sources and
provide additional financial maintenance covenant headroom, the
Company entered into amendments to its global revolving credit
facility (the “Credit Facility”), the guaranty related to its
Shanghai revolving credit facility (the “Shanghai Guaranty”) and
its various private notes. These amendments primarily modify the
financial ratio thresholds set forth in certain covenants included
in the agreements governing these debt issuances through and
including the Company’s fiscal quarter ending April 30, 2021.
Alessandro Bogliolo, Chief Executive Officer, said, “The
character and strength of Tiffany & Co. have been tested many
times over the past 183 years and, because of its exceptionally
talented and devoted employees, the Company has always been able to
persevere and succeed. That is why we took balanced and appropriate
steps, like much of the luxury industry, to protect our valued
employees who are the heart and soul of the Brand. The entire
Tiffany family has shown extraordinary agility and is fully
committed to ensuring that the deep connection we have built with
our customers is enhanced and strengthened during these difficult
times.
While the first quarter was very challenging with sales and
earnings significantly impacted by COVID-19, the impact of which we
expect to negatively affect our full-year sales and earnings
relative to 2019, I am confident Tiffany’s best days remain in
front of us because there is evidence that the strategic decisions
we took to focus on our Mainland China domestic business, global
e-commerce, and new product innovation are paying off - even
against the backdrop of a global pandemic. Let me expand, briefly,
on each of these elements.
“First, while sales in key markets like the United States and
Japan were down significantly during the first quarter, our
business performance in Mainland China, which was the first market
impacted by the virus, is indicative that a robust recovery is
underway. Retail sales in Mainland China were down approximately
85% and 15% during the first and second months of the quarter, but
up approximately 30% during April, each as compared to the same
period in the prior year. Moreover, that sequential strength has
continued to accelerate with May retail sales in Mainland China up
approximately 90% despite global net sales being down approximately
40% in that month as compared to May 2019. This evidence not only
leads us to believe that our global net sales will significantly
improve over the balance of the fiscal year relative to our
year-to-date performance, but also confirms that our decision to
invest heavily in growing our domestic business in Mainland China
was particularly prudent and well-timed, given the recent sharp
decline in Chinese tourism abroad and the increase in local
consumption. We are confident that Tiffany is now well positioned
to benefit in the years ahead in this important market.
“Second, while first quarter sales were negatively impacted due
to numerous store closures resulting from COVID-19, our global
e-commerce business has performed well in the quarter due, in part,
to last year’s complete re-platforming of the front-end of our
e-commerce sites and our decision to stand up a sales-enabled
website in Mainland China. First quarter e-commerce sales were up
23% globally with key markets such as the United States and the
United Kingdom up 14% and 15%, respectively. Additionally, sales
through our Mainland China e-commerce portal have grown
sequentially every quarter since the portal was launched last July.
Our strong global online sales trend has continued through May,
with global e-commerce sales more than doubling those of May 2019,
reflecting significant increases across every region, and bringing
our global e-commerce sales up to approximately 15% of our total
net sales for the fiscal year-to-date May period versus the 6% that
global e-commerce sales represented in each of the last three full
fiscal years.
“Finally, Tiffany T1 - our newly launched collection in rose
gold and gold with diamonds - is off to a tremendous start with
cumulative sales through the end of May matching our original
projections despite a significant number of our stores being closed
around the world. Based on our experience with the Tiffany HardWear
and Paper Flowers launches, we believe it is likely that year one
sales of T1 will eclipse year one sales for these two launches
combined and may well exceed the sales of Tiffany T-Color, which
was successfully launched last October and since then has been
often out-of-stock due to overwhelming demand.
Mr. Bogliolo finished his comments by saying: “For these
reasons, and as I stated earlier, I am confident that Tiffany’s
best days remain ahead of us and I am excited we will be taking
that journey with LVMH by our side. On the topic of the merger, we
are pleased that there has been additional progress with the
antitrust / competition process in the last few weeks; notably, we
obtained clearance last week for the transaction from the Federal
Antimonopoly Service of Russia and were notified in late May that
the Mexican competition authority has declared our filing to be
complete.”
Mark Erceg, Chief Financial Officer, added, “Tiffany has an
investment grade balance sheet, has ample cash on hand and was in
compliance with all debt covenants as of April 30, 2020.
Nonetheless, we still took the decision (as have many other
companies) to amend certain of our debt agreements in order to
create additional financial covenant headroom given these
unprecedented times. These amendments were executed on June 8, 2020
and effect changes to certain provisions and covenants from the
second quarter of fiscal 2020 through and including the first
quarter of fiscal 2021, including, among other things: (a) an
increase in the maximum leverage ratio under the Credit Facility,
Shanghai Guaranty and our private notes, to 4.50 to 1.00; and (b) a
reduction of the fixed charge coverage ratio test for debt
incurrence in our private notes to 0.75 to 1.00. Based on our
current forecast, we believe that these amendments give us ample
headroom during the effective amendment period to remain in
compliance with our leverage ratio financial maintenance covenant,
and to meet the fixed charge ratio test for debt incurrence. The
amendments are also permitted under the Merger Agreement. Finally,
we have thoughtfully revised our plans to significantly reduce
costs and dramatically lower our CAPEX spending by postponing
selected projects for the year, versus our going-in plans, to help
protect earnings and preserve cash.”
Net sales by region in the first quarter
were as follows:
- In the Americas, total net sales declined 45% to $225 million,
which included a comparable sales decline of 45%. On a
constant-exchange-rate basis, both total net sales and comparable
sales declined 44%. Management attributed the declines to COVID-19
and the resulting closures of substantially all of our stores in
the region that began in mid-March and persisted through the end of
the first quarter.
- In Asia-Pacific, total net sales declined 46% to $174 million
and comparable sales declined 45%. On a constant-exchange-rate
basis, total sales decreased 44% and comparable sales declined 42%
as compared to the prior year. Management attributed the declines
to the impact of COVID-19 that caused store closures in Mainland
China beginning in February and spread to the rest of the
Asia-Pacific markets in March and April. Stores began to re-open in
Mainland China at the end of February. As of April 30, 2020,
approximately 85% of the Company’s retail stores in this region
were fully or partially open.
- In Japan, total net sales declined 40% to $86 million and
comparable sales declined 41%. On a constant-exchange-rate basis,
total sales and comparable sales decreased by 41% and 42%,
respectively, as compared to the prior year. Management attributed
the decreases to the effects of COVID-19, including the resulting
closures of substantially all of the Company’s stores across the
region, which primarily began in early April 2020, and the decline
in tourist traffic that persisted throughout the quarter. As of
April 30, 2020, approximately 5% of the Company’s retail stores in
this region were fully or partially open.
- In Europe, total net sales declined 40% to $61 million, and
comparable sales declined 42%. On a constant-exchange-rate basis,
total sales and comparable sales decreased 38% and 40%,
respectively. The decline in total net sales reflected the impact
of COVID-19 and the resulting store closures that primarily began
in mid-March and persisted through the second half of April, when
various markets slowly began re-opening. As of April 30, 2020,
approximately 15% of the Company’s retail stores in this region
were fully or partially open.
- Other net sales of $9 million were 65% below the prior year due
to the impact of COVID-19 and lower wholesale sales of
diamonds.
- Tiffany closed two Company-operated stores in the first quarter
and relocated two stores. At April 30, 2020, the Company operated
324 stores (123 in the Americas, 90 in Asia-Pacific, 58 in Japan,
48 in Europe, and five in the UAE), versus 321 stores a year ago
(124 in the Americas, 89 in Asia-Pacific, 56 in Japan, 47 in
Europe, and five in the UAE). As of April 30, 2020, approximately
70% of the Company’s retail stores remained closed worldwide. The
Company has continued to gradually reopen a number of retail stores
across its markets in accordance with applicable guidelines
established by local governments.
- Sales results by jewelry category in the first quarter were as
follows: Jewelry Collections declined 44%, Engagement Jewelry
declined 49% and Designer Jewelry declined 39%, which management
attributed to the effects of COVID-19 and the resulting store
closures across the markets.
Other highlights in the first
quarter:
- Gross margin (gross profit as a percentage of net sales) of
55.6% was below the prior year’s 61.7%. The lower margin was
largely due to (i) sales deleverage on fixed costs resulting from
the effects of COVID-19 on net sales, (ii) certain overhead costs
not capitalized in the period resulting from certain manufacturing
locations being closed or operating at reduced capacity during the
first quarter due to COVID-19 and (iii) an increase in inventory
reserves. Additionally, the first quarter of 2020 included the
impact of a $12.3 million charge that was recorded to fully reserve
the asset related to an expected insurance recovery in respect of
the bankruptcy filing of a metal refiner to which the Company
entrusted precious scrap metal.
- Selling, general and administrative (“SG&A”) expenses,
which included $16.3 million of costs related to the pending Merger
and a $12.0 million charitable contribution to The Tiffany &
Co. Foundation (see “Non-GAAP Measures” for further details),
decreased 10% from the prior year. These costs were more than
offset by decreased store occupancy expenses and a decrease in
labor and incentive compensation costs. Excluding the pending
Merger related costs and the charitable contribution noted above,
SG&A expenses decreased $72.2 million, or 16%, compared to the
prior year (see “Non-GAAP Measures”). SG&A expenses as a
percentage of net sales increased significantly due to sales
deleverage on operating expenses resulting from the effects of
COVID-19 on net sales. Changes in foreign currency exchange rates
did not have a meaningful effect on SG&A expenses in the first
quarter as compared with the prior year.
- The effective income tax rate for the three months ended April
30, 2020 was 28.0% versus 17.3% in the prior year. The increase in
the effective income tax rate for the three months ended April 30,
2020 was primarily due to the jurisdictional mix of earnings, which
are taxed at the statutory tax rates applicable to each
jurisdiction, as well as an estimated increase in the Global
Intangible Low-Taxed Income (“GILTI”) tax, each of which reflects
the impact of COVID-19 on the Company’s results of operations.
- The Company did not repurchase any shares of its Common Stock
in the first quarter pursuant to certain restrictions set forth in
the Merger Agreement.
- Net inventories at April 30, 2020 were 2% above the prior
year.
- At April 30, 2020, cash and cash equivalents and short-term
investments totaled $1.1 billion. Total debt (short-term borrowings
and long-term debt) of $1.5 billion represented 48% of
stockholders’ equity, versus 32% a year ago. This increase was
primarily the result of a $500 million drawdown on the Company’s
revolving credit facility during the quarter. This drawdown, which
was permitted under the Merger Agreement, was a precautionary
measure in order to increase the Company’s cash position and
maintain financial flexibility in light of uncertainty in the
global markets resulting from COVID-19. The drawdown proceeds can
be repaid at any time. Management believes that cash on hand,
internally generated cash flows and the funds available under the
Company’s revolving credit facilities are sufficient to support the
Company’s liquidity and capital requirements for the foreseeable
future.
- As mentioned in the previous earnings release for the fourth
quarter and full year of fiscal 2019, the Company will not be
communicating an outlook for the remainder of the year.
The Company continues to operate in a dynamic environment, which
will continue to evolve. The full extent of the impact of the
COVID-19 pandemic on the Company’s operational and financial
performance will depend on many factors outside the Company’s
control.
Conference Call:
In light of the Company’s entry into the Merger Agreement, the
Company will not conduct a conference call to review its results
for the three months ended April 30, 2020. These results are set
forth in the Company’s Form 10-Q filed today with the U.S.
Securities and Exchange Commission.
Next Scheduled Announcement:
The Company expects to report its financial results for the
second quarter ending July 31, 2020 by issuing a news release. To
receive email alerts of this release, as well as other future
announcements, please register at investor.tiffany.com (and click
on “Contact Us/Email Alerts”).
About Tiffany & Co.:
In 1837, Charles Lewis Tiffany founded his company in New York
City where his store was soon acclaimed as the palace of jewels for
its exceptional gemstones. Since then, TIFFANY & CO. has become
synonymous with elegance, innovative design, fine craftsmanship and
creative excellence. During the 20th century fame thrived worldwide
with store network expansion and continuous cultural relevance, as
exemplified by Truman Capote’s Breakfast at Tiffany’s and the film
starring Audrey Hepburn.
Today, with more than 14,000 employees, TIFFANY & CO. and
its subsidiaries design, manufacture and market jewelry, watches
and luxury accessories - including more than 5,000 skilled artisans
who cut diamonds and craft jewelry in the Company’s workshops,
realizing its commitment to superlative quality. The Company
operates more than 300 TIFFANY & CO. retail stores worldwide as
part of its omnichannel approach. To learn more about TIFFANY &
CO. as well as its commitment to sustainability, please visit
www.tiffany.com.
Forward-Looking Statements:
The historical trends and results reported in this release
should not be considered an indication of future performance.
Further, statements contained in this release that are not
statements of historical fact, including those that refer to plans,
assumptions and expectations for future periods, are
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities Exchange
Act of 1934 and the Private Securities Litigation Reform Act of
1995, each as amended. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain, such as
statements about the consummation of the pending Merger and the
anticipated benefits thereof. Forward-looking statements include,
but are not limited to, statements that can be identified by the
use of words such as ‘expects, ‘projects,’ ‘anticipates,’
‘assumes,’ ‘forecasts,’ ‘plans,’ ‘believes,’ ‘intends,’
‘estimates,’ ‘pursues,’ ‘scheduled,’ ‘continues,’ ‘outlook,’ ‘may,’
‘will,’ ‘can,’ ‘should’ and variations of such words and similar
expressions. Examples of forward-looking statements include, but
are not limited to, statements the Company makes regarding its
plans, assumptions, expectations, beliefs and objectives with
respect to the Merger; the Company’s assumptions, expectations and
beliefs with respect to COVID-19, including the impact thereof on
the Company’s business, revenues, cash flows and results of
operations; expectations for the Tiffany T-1 product launch; store
openings and closings; store productivity; the renovation of the
Company’s New York Flagship store, including the timing and cost
thereof, and the temporary relocation of its retail operations to 6
East 57th Street; product introductions; sales; sales growth; sales
trends; store traffic; the Company’s strategy and initiatives and
the pace of execution thereon; the amount and timing of investment
spending; the Company’s objectives to compete in the global luxury
market and to improve financial performance; retail prices; gross
margin; operating margin; expenses; interest expense and financing
costs; effective income tax rate; the nature, amount or scope of
charges resulting from recent revisions to the U.S. tax code; net
earnings and net earnings per share; share count; inventories;
capital expenditures; cash flow; liquidity, including the need to
incur additional indebtedness; compliance with covenants under the
Company’s debt instruments, including the financial ratios set
forth therein; currency translation; macroeconomic and geopolitical
conditions; growth opportunities; litigation outcomes and recovery
related thereto; amounts recovered under Company insurance
policies; contributions to Company pension plans; and certain
ongoing or planned real estate, product, marketing, retail,
customer experience, manufacturing, supply chain, information
systems development, upgrades and replacement, and other
operational initiatives and strategic priorities.
These forward-looking statements are not guarantees of future
results and are based upon the current views, assumptions and plans
of management, and speak only as of the date on which they are made
and are subject to a number of factors, risks and uncertainties,
many of which are outside of the Company’s control. You should not
place undue reliance on such statements. Actual results could
therefore differ materially from the planned, assumed or expected
results expressed in, or implied by, these forward-looking
statements. While the Company cannot predict all of the factors
that could form the basis of such differences, key factors, risks
and uncertainties include, but are not limited to: the recent
outbreak of COVID-19, including the duration and scope thereof, the
availability of a vaccine or cure that mitigates the effect of the
virus, and changes in financial, business, travel and tourism,
consumer discretionary spending and other general consumer
behaviors, political, public health and other conditions,
circumstances, requirements and practices resulting therefrom;
global macroeconomic and geopolitical developments; changes in
interest and foreign currency rates; changes in taxation policies
and regulations (including changes effected by the recent revisions
to the U.S. tax code) or changes in the guidance related to, or
interpretation of, such policies and regulations; shifting tourism
trends; the recent widespread protests in the U.S.; regional
instability; violence (including terrorist activities); political
activities or events (including the potential for rapid and
unexpected changes in government, economic and political policies,
the imposition of additional duties, tariffs, taxes and other
charges or other barriers to trade, including as a result of
changes in diplomatic and trade relations or agreements with other
countries); weather conditions that may affect local and tourist
consumer spending; changes in consumer confidence, preferences and
shopping patterns, as well as the Company’s ability to accurately
predict and timely respond to such changes; shifts in the Company’s
product and geographic sales mix; variations in the cost and
availability of diamonds, gemstones and precious metals; adverse
publicity regarding the Company and its products, the Company’s
third-party vendors or the diamond or jewelry industry more
generally; any non-compliance by third-party vendors and suppliers
with the Company’s sourcing and quality standards, codes of
conduct, or contractual requirements as well as applicable laws and
regulations; changes in the Company’s competitive landscape;
disruptions impacting the Company’s business and operations;
failure to successfully implement or make changes to the Company’s
information systems; changes in the cost and timing estimates
associated with the renovation of the Company’s New York Flagship
store; delays caused by third parties involved in the
aforementioned renovation; any casualty, damage or destruction to
the Company’s New York Flagship store or 6 East 57th Street
location; the Company’s ability to successfully control costs and
execute on, and achieve the expected benefits from, the operational
initiatives and strategic priorities referenced above; conditions
to the completion of the Merger may not be satisfied or the
regulatory approvals required for the Merger may not be obtained,
in each case, on the terms expected or on the anticipated schedule
which contemplates closing of the acquisition in the middle of
2020; the occurrence of any event, change or other circumstance
that could give rise to the termination of the Merger Agreement or
affect the ability of the parties to recognize the benefits of the
Merger; the effect of the announcement or pendency of the Merger on
the Company’s business relationships, operating results and
business generally; risks that the Merger disrupts the Company’s
current plans and operations and potential difficulties in the
Company’s employee retention as a result of the Merger; potential
litigation that may be instituted against the Company or its
directors or officers related to the Merger or the Merger Agreement
and any adverse outcome of any such litigation; the amount of the
costs, fees, expenses and other charges related to the Merger,
including in the event of any unexpected delays; other risks to
consummation of the Merger, including the risk that the Merger will
not be consummated within the expected time period, or at all,
which may affect the Company’s business and the price of its common
stock; and any adverse effects on the Company by other general
industry, economic, business and/or competitive factors.
Consequences of material differences in results as compared with
those anticipated in the forward-looking statements could include,
among other things, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks.
Developments relating to these and other factors may also warrant
changes to the Company’s operating and strategic plans, including
with respect to store openings, closings and renovations, capital
expenditures, information systems development, inventory
management, and continuing execution on, or timing of, the
aforementioned initiatives and priorities. Such consequences and
changes could also cause actual results to differ materially from
the expected results expressed in, or implied by, the
forward-looking statements.
Additional information about potential risks and uncertainties
that could affect the Company’s business and financial results is
included under “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in the
Company’s Annual Report on Form 10-K for the fiscal year ended
January 31, 2020 and the Company’s most recently Quarterly Report
on Form 10-Q, the definitive proxy statement on Schedule 14A that
the Company filed on January 6, 2020, and in the Company’s other
filings made with the U.S. Securities and Exchange Commission
(“SEC”) from time to time, which are available via the SEC’s
website at www.sec.gov. Readers of this release should consider the
risks, uncertainties and factors outlined above and in the
aforementioned Form 10-K and Form 10-Q in evaluating, and are
cautioned not to place undue reliance on, the forward-looking
statements contained herein. The Company undertakes no obligation
to update or revise any forward-looking statements to reflect
subsequent events or circumstances, except as required by
applicable law or regulation.
# # #
TIFFANY & CO. AND SUBSIDIARIES
(Unaudited)
NON-GAAP MEASURES
The Company reports information in accordance with U.S.
Generally Accepted Accounting Principles (“GAAP”). Internally,
management also monitors and measures its performance using certain
sales and earnings measures that include or exclude amounts, or are
subject to adjustments that have the effect of including or
excluding amounts, from the most directly comparable GAAP measure
(“non-GAAP financial measures”). The Company presents such non-GAAP
financial measures in reporting its financial results to provide
investors with useful supplemental information that will allow them
to evaluate the Company’s operating results using the same measures
that management uses to monitor and measure its performance. The
Company’s management does not, nor does it suggest that investors
should, consider non-GAAP financial measures in isolation from, or
as a substitute for, financial information prepared in accordance
with GAAP. These non-GAAP financial measures presented here may not
be comparable to similarly-titled measures used by other
companies.
Net Sales
The Company’s reported net sales reflect either a
translation-related benefit from strengthening foreign currencies
or a detriment from a strengthening U.S. dollar. Internally,
management monitors and measures its sales performance on a
non-GAAP basis that eliminates the positive or negative effects
that result from translating sales made outside the U.S. into U.S.
dollars (“constant-exchange-rate basis”). Sales on a
constant-exchange-rate basis are calculated by taking the current
year’s sales in local currencies and translating them into U.S.
dollars using the prior year’s foreign currency exchange rates.
Management believes this constant-exchange-rate basis provides a
useful supplemental basis for the assessment of sales performance
and of comparability between reporting periods. The following
tables reconcile the sales percentage increases (decreases) from
the GAAP to the non-GAAP basis versus the previous year:
First Quarter 2020 vs. 2019
GAAP Reported
Translation Effect
Constant- Exchange- Rate
Basis
Net
Sales:
Worldwide
(45
)%
(1
)%
(44
)%
Americas
(45
)
(1
)
(44
)
Asia-Pacific
(46
)
(2
)
(44
)
Japan
(40
)
1
(41
)
Europe
(40
)
(2
)
(38
)
Other
(65
)
—
(65
)
Comparable
Sales:
Worldwide
(44
)%
(1
)%
(43
)%
Americas
(45
)
(1
)
(44
)
Asia-Pacific
(45
)
(3
)
(42
)
Japan
(41
)
1
(42
)
Europe
(42
)
(2
)
(40
)
Other
(53
)
—
(53
)
First Quarter 2020 vs. 2019
GAAP Reported
Translation Effect
Constant- Exchange- Rate
Basis
Jewelry sales by product
category:
Jewelry collections
(44
)%
(1
)%
(43
)%
Engagement jewelry
(49
)
(1
)
(48
)
Designer jewelry
(39
)
(1
)
(38
)
Statement of Earnings
Internally, management monitors and measures its earnings
performance excluding certain items listed below. Management
believes excluding such items provides a useful supplemental basis
for the assessment of the Company’s results relative to the
corresponding period in the prior year. The following tables
reconcile certain GAAP amounts to non-GAAP amounts:
(in millions, except per share
amounts)
GAAP
Charges related to the pending
Merger a
Sydney, Australia Recovery and
Charitable Contribution b
Non-GAAP
Three Months Ended April 30,
2020
Gross Profit
$
309.0
$
0.4
$
—
$
309.4
As a % of sales
55.6
%
—
%
—
%
55.7
%
Selling, general & administrative
expenses
414.4
(16.3
)
(12.0
)
386.1
As a % of sales
74.6
%
(2.9
)%
(2.2
)%
69.5
%
Loss from operations
(105.4
)
16.7
12.0
(76.7
)
As a % of sales
(19.0
)%
3.0
%
2.2
%
(13.8
)%
Other income, net
(25.4
)
—
31.4
6.0
(Benefit) provision for income taxes
(25.2
)
1.3
(4.5
)
(28.4
)
Effective income tax rate
28.0
%
7.6
%
22.9
%
30.7
%
Net loss
(64.6
)
15.4
(14.9
)
(64.1
)
Diluted earnings per share *
(0.53
)
0.13
(0.12
)
(0.53
)
- Costs recorded in the first quarter of 2020 related to the
pending Merger.
- Recognition of (i) a pre-tax gain of $31.4 million related to
amounts received as compensation for the previous acquisition of
the premises containing one of the Company’s leased retail stores
and an administrative office in Sydney, Australia under compulsory
acquisition laws in that country and (ii) a pre-tax expense of
$12.0 million for a charitable contribution to The Tiffany &
Co. Foundation funded in the first quarter of 2020 in connection
with the proceeds from the compensation referenced above.
* Amounts may not add due to rounding.
TIFFANY & CO. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
(Unaudited, in millions, except
per share amounts)
Three Months Ended
April 30,
2020
2019
Net sales
$
555.5
$
1,003.1
Cost of sales
246.5
383.9
Gross profit
309.0
619.2
Selling, general and administrative
expenses
414.4
458.3
(Loss) earnings from operations
(105.4
)
160.9
Interest expense and financing costs
9.8
10.4
Other income, net
(25.4
)
(1.0
)
(Loss) earnings from operations before
income taxes
(89.8
)
151.5
(Benefit) provision for income taxes
(25.2
)
26.3
Net (loss) earnings
$
(64.6
)
$
125.2
Net (loss) earnings per share:
Basic
$
(0.53
)
$
1.03
Diluted
$
(0.53
)
$
1.03
Weighted-average number of common
shares:
Basic
121.2
121.4
Diluted
121.2
121.9
TIFFANY & CO. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in millions)
April 30, 2020
January 31, 2020
April 30, 2019
ASSETS
Current assets:
Cash and cash equivalents and short-term
investments
$
1,058.5
$
897.4
$
762.7
Accounts receivable, net
152.5
240.0
210.5
Inventories, net
2,506.2
2,463.9
2,453.8
Prepaid expenses and other current
assets
314.4
274.2
215.8
Total current assets
4,031.6
3,875.5
3,642.8
Operating lease right-of-use assets
1,059.6
1,102.7
1,066.1
Property, plant and equipment, net
1,075.7
1,098.8
1,019.2
Other assets, net
576.9
583.1
547.6
$
6,743.8
$
6,660.1
$
6,275.7
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Short-term borrowings
$
651.9
$
147.9
$
142.1
Accounts payable and accrued
liabilities
326.9
541.5
392.6
Current portion of operating lease
liabilities
206.6
202.8
226.3
Income taxes payable
10.4
16.4
40.6
Merchandise credits and deferred
revenue
60.6
61.8
72.1
Total current liabilities
1,256.4
970.4
873.7
Long-term debt
886.1
884.1
881.2
Pension/postretirement benefit
obligations
377.1
374.5
284.9
Long-term portion of operating lease
liabilities
964.0
1,008.4
952.1
Other long-term liabilities
79.2
87.3
111.8
Stockholders’ equity
3,181.0
3,335.4
3,172.0
$
6,743.8
$
6,660.1
$
6,275.7
TIF-E
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version on businesswire.com: https://www.businesswire.com/news/home/20200609005290/en/
Jason Wong (973) 254-7612 jason.wong@tiffany.com
Tiffany (NYSE:TIF)
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