2008 U.S. sales plunge at Tiffany

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2008 U.S. sales plunge at Tiffany

March 23, 2009

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New York--Sales slid in 2008 for retail stalwart Tiffany and Co., a decline fueled largely by weakness in the Americas, especially toward year's end.

According to a company release, worldwide sales totaled $2.86 billion in 2008, a decline of 3 percent (4 percent on a constant-exchange-rate basis) while same-store sales slid 9 percent on a constant-exchange-rate basis.

In the fourth quarter, sales fell 20 percent (19 percent on a constant-exchange-rate basis) to $841.2 million, while same-store sales fell 23 percent on a constant-exchange-rate basis.

In the Americas, full-year sales were down 10 percent to $1.59 billion while fourth-quarter sales dropped 29 percent to $458.9 million.

This included a 16 percent drop in U.S. same-store sales for the year, and a precipitous 33 percent decline in same-store U.S. sales in the fourth quarter.

Breaking it down by location, comparable stores sales for Tiffany's branch locations were down 17 percent on the year and 33 percent in the fourth quarter, while the New York flagship store saw sales decline 9 percent on the year and 34 percent in the fourth quarter.

Combined Internet and catalog sales declined 10 percent in 2008 and 20 percent in the fourth quarter.

Commenting on the decline, Tiffany Chairman and Chief Executive Officer Michael J. Kowalski said in the release, "Tiffany has clearly not been immune from global economic turmoil in recent months and we are taking a cautious view to business conditions in 2009. We have addressed our cost structure in order to maintain reasonably healthy levels of profitability and strong liquidity and position Tiffany for future growth."

In the fourth-quarter 2008, Tiffany announced it was offering an early-retirement package to about 800 U.S. employees.

According to the release issued Monday, 600 accepted the offer. This, combined with additional staff reductions and the anticipated closing of Tiffany's Iridesse pearl stores, represents about a 10 percent reduction in staff worldwide, according to management.

Looking forward to 2009, Kowalski said the company expects "challenging economic conditions throughout the year," with worldwide sales declining 11 percent, including a mid-teens percentage decline in sales in the Americas amplified in the first half of the year.

As of Jan. 31, Tiffany operated 206 stores (86 in the Americas, 96 in Asia-Pacific and 24 in Europe) versus 184 a year ago (80 in the Americas, 87 in Asia-Pacific and 17 in Europe.)

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