Tiffany looks to reduce staff through retirement plan

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Tiffany looks to reduce staff through retirement plan

December 03, 2008

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New York--Luxury retail jeweler Tiffany and Co., which recently announced a drop in sales for the third quarter, is now making plans to adjust its staffing levels in the United States.

Last week, the company announced a 1 percent drop in overall sales and a 7 percent drop in same-store sales for the third quarter. In light of the economic downturn, the company is offering a "voluntary retirement incentive" to approximately 800 U.S. employees who meet certain age and service eligibility requirements.

In its quarterly Securities and Exchange Commission (SEC) report filed on Tuesday, the retailer said that on Nov. 25, 2008, the company's New York subsidiary began offering the incentive to employees. Tiffany and Co. executive officers are not eligible to participate.

The incentive includes increased age and service credit for pension purposes, severance payments, enhanced retirement health care benefits and accelerated vesting and exercise rights for equality grants that are now outstanding.

In connection with the incentive, the retailer said it expects to record in the fourth quarter of 2008 a non-recurring pre-tax charge in the range of $50 million to $65 million. The exact amount will depend on the number of eligible employees who accept the incentive, for which the election period ends Jan. 12, 2009.

Tiffany and Co. was vague on additional plans to reduce its headcount. The company said in its SEC report that by the end of the fourth quarter of 2008, management expects to have finalized plans to further adjust staffing levels.

The retailer expects to open 22 company-operated Tiffany and Co. stores and boutiques in 2008, according to the SEC filing, increasing the store base by 12 percent. For 2009, however, the rate will be moderated, with Tiffany expecting to open approximately five stores in the Americas, and approximately eight locations across Asia-Pacific and Europe.

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