Iconic jeweler Tiffany and Co. plans to open 13 stores this year despite bleary economic conditions, its latest filing with the Securities and Exchange Commission (SEC) shows, www.nationaljewelernetwork.com reports.
According to its Form 10-K filed on Monday, while planned store openings are down from 22 in 2008, Tiffany "believes there are a significant number of locations remaining in the Americas, Asia-Pacific and Europe that meet the requirements of a Tiffany and Co. location."
Plans call for five new stores in the Americas, seven stores in the Asia-Pacific market and one store in Europe.
Specifically, Tiffany--which shuttered Iridesse, its U.S. chain of 16 pearl-only stores in 2008--will focus on opening locations like its smaller, 2,600-square-foot store in Glendale, Calif.
At this store, customers can handle merchandise independently, without the aid of a salesperson, but the store does not carry high-end or engagement jewelry.
"The selection," the filing states, "allows the store to concentrate higher-margin products in a smaller space. Management believes that this new format will be highly efficient and will give the company the opportunity to open stores in affluent, albeit smaller, U.S. cities and to better serve larger markets where the company already operates full-assortment stores."
In addition, the 10-K filing contains information detailing what jewelry Tiffany sells the most of in different parts of the world.
According to the filing, in 2008, the greatest percentage of Tiffany's sales in the Americas (34 percent) and Europe (40 percent) were concentrated in the non-gemstone, sterling silver category, with an average ticket price of about $200.
However, in the Asia-Pacific market, two categories shared the greatest percentage of 2008 sales. According to the filing, Tiffany made 30 percent of its sales in the gemstone jewelry and gemstone band rings (other than engagement jewelry) category, with an average ticket price of $3,300 in 2008. Another 30 percent of the company's sales in the Asia-Pacific market came from diamond rings and wedding bands, with an average ticket price of $3,000.
However, as www.diamonds.net points it out, Tiffany & Co.'s profits tumbled during its fourth fiscal quarter as the weak consumer market, particularly in the U.S., took its toll on company sales. Profits for the three months ending January 31, 2009, fell 76 percent to $31.1 million, the luxury jeweler reported before the bell Monday.
Tiffany took a one-time pretax charge of $97.8 million for an early retirement program and other staffing reductions in the fourth quarter. Approximately 800 employees were offered early retirement, 600 of whom accepted, Tiffany reported.
There was also a $7.5 million pretax charge related to the anticipated closing of Tiffany's Iridesse retail operations, charges of $12.4 million to write off an investment in diamond mining at the Jericho mine in Canada, and a pretax charge of $3.4 million to close its diamond polishing facility in Yellowknife, Canada. Together with the drop in headcount from the early retirements and the anticipated closing of Iridesse, Tiffany expects a total staff reduction of 10 percent, resulting in approximately $60 million in pretax savings in 2009.
Tiffany's net inventories increased 17 percent in fiscal year to $1.6 billion, due to lower-than-expected sales, the opening of new stores and increases in inventories of raw materials. Total debt as a percentage of stockholders’ equity was 45 percent as of January 31, versus 26 percent one year earlier. Tiffany secured $100 million of long-term financing in the fourth quarter and issued an additional $250 million of long-term debt after the close of the year. The funds are being used to refinance existing debt and for general corporate purposes.
The company previously reported that its fourth-quarter sales declined 20 percent to $841 million. Same-store sales in the U.S. fell 33 percent during the period and total sales fell 30 percent. Comparable store sales saw a drop of 13 percent in the Asia-Pacific region, while in Europe they were flat.
Full fiscal year profits decreased 32 percent to $220 million and sales were down 3 percent to $2.9 billion, the company reported. “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,” said Michael Kowalski, chairman and chief executive officer (CEO) of Tiffany. Kowalski reported that Tiffany has reduced its cost structure “to maintain reasonably healthy levels of profitability and strong liquidity,” but added that there were no signs yet of an upturn in the business. "Our planning is based on the assumption that economic conditions will remain challenging throughout the year,” he said.
Tiffany expects an 11 percent decline in sales in 2009, assuming a sales percentage drop in the mid-teens across the Americas, the mid-single-digits in the Asia-Pacific region, and the high-single-digits in Europe. During a morning conference call, the company laid out plans to open 13 new stores in 2009, including seven in Asia. The company projected that rough diamond prices will fall an additional 20 percent during the year.
