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Tiffany reports strong 1Q, watch-distribution plans

May 31, 2007

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New York—Tiffany and Co. got off to a solid start for its fiscal year, announcing 15 percent increases in both worldwide and U.S. retail sales for the period ended April 30.

The company also announced on Thursday plans to launch a significant expansion of its wholesale distribution of Tiffany and Co. watches in 2008 in major U.S. and international markets.

Overall, the company's net sales rose 15 percent to nearly $620.9 million for the first quarter, the company said. Growth was geographically broad-based, though the Japanese retail market continued to be weak.

On a constant-exchange-rate basis, net sales jumped 14 percent and worldwide comparable-store sales rose 8 percent.

"We are pleased to start 2007 with these results and excited about our plans for the full year," Tiffany chairman and chief executive officer Michael J. Kowalski said in a statement. "We will increase the number of our company-operated Tiffany and Co. locations by approximately 10 percent, and introduce a wide range of new product designs."

He also said that, given the strong watch assortment Tiffany has developed in recent years, the retailer now has a long-term objective to increase watch sales as a percentage of its overall business.

"We are now well-positioned to take the next step in this evolution and believe that expanding our distribution through other fine-jewelry and watch retailers will enable us to build customer awareness and generate meaningful incremental sales growth," Kowalski said. "The initial offering will include our Mark, Atlas, Grand and T-57 collections, as well as a selection of jeweled timepieces."

U.S. retail sales for the first quarter increased 15 percent to nearly $298.7 million, a gain that Tiffany attributed primarily to increased spending for each transaction. A 26 percent same-store sales increase in the New York flagship store and a 9 percent increase in branch-store sales led to overall comparable-store sales growth of 12 percent.

International retail sales rose 15 percent to $248 million, with sales up 13 percent on a constant-exchange-rate basis and 4 percent on a same-store sales basis.

Direct-marketing sales rose 11 percent to nearly $33.3 million, due to a higher number of orders and higher average tickets.

Other sales increased 22 percent to nearly $40.9 million. The increase was due to a $5.2 million increase in wholesale sales of diamonds, as well as growth in the company's specialty retail sales at its Little Switzerland and Iridesse stores, the company said.
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