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Tiffany and Co.'s U.S. holiday sales fall

January 11, 2008

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New York—Tiffany and Co.'s sales worldwide rose 8 percent (6 percent at constant exchange rates) over the holidays, but the domestic market proved to be a sore point, with U.S. same-store sales for the high-end retailer dropping 2 percent in November and December.

This downturn in sales for the usually robust retailer is a reflection of the unstable state of the U.S. economy in which uncertain consumers are hanging on to their money, the company said. By comparison, last year, Tiffany and Co. saw same-store U.S. holiday sales increase 8 percent.

Overall, Tiffany and Co. reported only a 4 percent increase in total U.S. retail sales, with holiday spending totaling $449.1 million.

"We believe a recent pullback in U.S. spending likely reflected a more cautious attitude among customers about the near-term direction of the economy and related factors," Tiffany and Co. Chairman and CEO Michael J. Kowalski said in a statement. "From a product perspective, we saw healthy sales growth in the engagement jewelry and silver jewelry categories."

In a reversal of what the retailer has seen in previous years in which the economy was shaky, consumers in the United States actually spent more per item, but there were fewer shoppers, Tiffany and Co. Vice President of Investor Relations Mark Aaron said in a conference call.

At its New York flagship store, holiday sales were up 10 percent over last year, an increase driven by foreign tourist spending, the company said.

Internationally, retail sales rose 18 percent (12 percent at constant exchange rates) to $334.8 million, on par with the 2006 holiday sales increase. Globally, same-store sales were up 5 percent.

Despite a slow holiday season in the United States, Tiffany and Co. is optimistic about 2008.

The company announced during the conference call that, in partnership with Milan-based luxury eyewear company Luxottica, it is expanding its offering to include a line of eyeglasses.

In addition, Tiffany and Co. plans to open five new U.S. stores in the coming year, and 15-20 stores in Asia and Europe, representing a 12 percent to 15 percent increase in total store square footage for the company.
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