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Delaware
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1-9494
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13-3228013
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☒
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbols(s)
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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TIF
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New York Stock Exchange
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
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☐
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Item 2.02
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Results of Operations and Financial Condition.
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Item 8.01
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Other Events.
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TIFFANY & CO.
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(Registrant)
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By: /s/ Leigh M. Harlan
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Leigh M. Harlan
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Senior Vice President, Secretary
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and General Counsel
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Date: December 5, 2019
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1.
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Director Qualification Standards; Size of the Board of Directors (the “Board”); Audit Committee Service; Director Nominations and Resignations.
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Fifth Avenue & 57th Street
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Contact:
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New York, N.Y. 10022
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Jason Wong
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(973) 254-7612
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jason.wong@tiffany.com
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•
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Worldwide net sales of $1.0 billion and comparable sales were unchanged from the prior year; on a constant-exchange-rate basis, net sales and comparable sales increased 1% from the prior year.
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◦
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Worldwide net sales and comparable sales, excluding the Hong Kong market in both years, increased by 4% and 3%, respectively, from the prior year. The effect of foreign currency translation was not significant.
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•
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Net earnings of $78 million were 17% lower than the prior year’s $95 million, and net earnings per diluted share were $0.65 versus $0.77 in the prior year.
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•
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Worldwide net sales declined 2% to $3.1 billion and comparable sales declined 3% from the prior year; on a constant-exchange-rate basis, net sales were unchanged from the prior year and comparable sales declined 1%.
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•
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Net earnings of $340 million were 11% lower than the prior year’s $382 million, and net earnings per diluted share were $2.80 versus $3.08 in the prior year.
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•
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In the Americas, total net sales decreased 4% in both the third quarter and the year-to-date, to $423 million and $1.3 billion, respectively; comparable sales decreased 4% in the third quarter and 5% in the year-to-date. Sales decreased across most of the region, and management attributed that decline to lower spending by foreign tourists and, to a lesser extent, local customers. On a constant-exchange-rate basis, total sales and comparable sales both declined 4% in the third quarter and year-to-date.
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•
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In Asia-Pacific, total net sales were unchanged in the third quarter and decreased 1% in the year-to-date, to $294 million and $916 million, respectively, which included comparable sales declines of 2% in the third quarter and 3% in the year-to-date. Management attributed the decrease in sales in both periods to the effect of foreign currency translation. On a constant-exchange-rate basis, total sales increased 3% in both the third quarter and year-to-date, while comparable sales increased 1% for both periods as compared to the prior year. Sales performance in both periods reflected the double-digit growth in the Chinese Mainland, significant disruptions in Hong Kong beginning earlier this year and mixed performance in other markets in the region. Management also attributed these sales results to higher spending by local customers largely offset by lower spending by foreign tourists.
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•
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In Japan, total net sales increased 19% in the third quarter and 5% in the year-to-date, to $169 million and $469 million, respectively; comparable sales increased 19% and 4% for those same periods, respectively. On a constant-exchange-rate basis, total sales increased 14% in the third quarter and 4% in the year-to-date, and comparable sales increased 14% and 3%, respectively. Management believes that strong sales growth in the quarter prior to October 1, 2019 reflected the Japanese consumers’ response to the increase in Japan’s consumption tax that took effect on that date.
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•
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In Europe, total net sales declined 3% in the third quarter and 4% in the year-to-date, to $111 million and $330 million, respectively, and comparable sales were unchanged in the third quarter and declined 4% in the year-to-date. Management attributed these changes to the effect of foreign currency translation. On a constant-exchange-rate basis, total sales increased 1% in both the third quarter and the year-to-date; comparable sales increased 4% and 1%, respectively.
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•
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Other net sales decreased 13% to $17 million in the third quarter and increased by 2% in the year-to-date to $67 million. Comparable sales declined 3% and 17% in the third quarter and the year-to-date, respectively.
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•
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Tiffany has opened five Company-operated stores in the year-to-date and closed three. At October 31, 2019, the Company operated 323 stores (124 in the Americas, 90 in Asia-Pacific, 56 in Japan, 48 in Europe, and five in the UAE).
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•
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Sales for jewelry categories in the third quarter and year-to-date were as follows: Jewelry Collections was unchanged for both periods; Engagement Jewelry was unchanged and declined 3%, respectively; and Designer Jewelry increased 1% and declined 8%, respectively.
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•
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Gross margin (gross profit as a percentage of net sales) of 61.7% in the third quarter and 62.1% in the year-to-date decreased as compared to 62.2% and 63.1% in the respective prior year periods. The decrease in both periods is primarily attributable to a shift in sales mix toward higher price point jewelry, as well as the unfavorable effect from an increase in wholesale sales of diamonds in the year-to-date.
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•
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Selling, general and administrative (“SG&A”) expenses increased 1% in the third quarter and decreased 1% in the year-to-date. These changes reflected an increase in store occupancy and depreciation costs offset by a decrease in labor and incentive compensation costs and marketing spending.
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•
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Earnings from operations as a percentage of net sales (“operating margin”) was 11.7% in the third quarter and 15.1% in the year-to-date, compared with 12.5% and 16.7% in the respective prior year periods.
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•
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The effective income tax rate for the third quarter of 2019 was 25.4% versus 17.1% in the prior year. The effective income tax rate for the year-to-date of 2019 was 21.3% versus 21.6% in the prior year. The effective income tax rate in the third quarter and year-to-date was increased by an income tax expense of $5.8 million, or 550 basis points and 130 basis points, respectively, due to a change in the estimated Foreign Derived Intangible Income (“FDII”) benefit for fiscal 2019. The effective income tax rate in the year-to-date of 2019 also included the recognition of an income tax benefit of $7.5 million, or 170 basis points, related to an increase in the estimated 2018 FDII benefit as a result of U.S. Treasury guidance issued during the first quarter of 2019. The effective income tax rate in the third quarter and year-to-date of 2018 was reduced by 380 basis points and 90 basis points, respectively, as a result of the true-up of $4.4 million of the Company’s prior year tax provision in conjunction with the filing of the 2017 tax returns. The effective income tax rate in the year-to-date of 2018 also included the recognition of an income tax benefit of $8.0 million, or 160 basis points, primarily as a result of a decrease in the gross amount of unrecognized tax benefits and accrued interest and penalties related thereto due to a lapse in a statute of limitations.
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•
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The Company repurchased approximately 883,000 shares of its Common Stock in the third quarter at a total cost of $78.0 million and an average cost of approximately $88 per share. The Company repurchased approximately 1.79 million shares of its Common Stock in the year-to-date at a total cost of $163.4 million and an average cost of approximately $91 per share.
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•
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Net inventories at October 31, 2019 were 4% above the prior year.
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•
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At October 31, 2019, cash and cash equivalents and short-term investments totaled $530 million. Total debt (short-term borrowings and long-term debt) of $974 million represented 31% of stockholders’ equity, which is the same as a year ago.
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Third Quarter 2019 vs. 2018
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Year-to-date 2019 vs. 2018
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||||||||||||||
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GAAP
Reported
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Translation
Effect
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Constant-
Exchange-
Rate Basis
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GAAP
Reported |
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Translation
Effect |
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Constant-
Exchange- Rate Basis |
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Net Sales:
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||||||
Worldwide
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—
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%
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(1
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)%
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1
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%
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(2
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)%
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(2
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)%
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—
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%
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Americas
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(4
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)
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—
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(4
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)
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(4
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)
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—
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(4
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)
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Asia-Pacific
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—
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(3
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)
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3
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(1
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)
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(4
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)
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3
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Japan
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19
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5
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14
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5
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1
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4
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Europe
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(3
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)
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(4
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)
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1
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(4
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)
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(5
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)
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1
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Other
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(13
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)
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—
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(13
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)
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2
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—
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2
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||||||
Comparable Sales:
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||||||
Worldwide
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—
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%
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(1
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)%
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1
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%
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(3
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)%
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(2
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)%
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(1
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)%
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Americas
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(4
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)
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—
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(4
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)
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(5
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)
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(1
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)
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(4
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)
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Asia-Pacific
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(2
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)
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(3
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)
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1
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(3
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)
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(4
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)
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1
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Japan
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19
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5
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14
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4
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1
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3
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Europe
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—
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(4
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)
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4
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(4
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)
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(5
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)
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1
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Other
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(3
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)
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—
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(3
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)
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(17
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)
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—
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(17
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)
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Third Quarter 2019 vs. 2018
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Year-to-date 2019 vs. 2018
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||||||||||||||
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GAAP
Reported
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Translation
Effect
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Constant-
Exchange-
Rate Basis
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GAAP
Reported |
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Translation
Effect |
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Constant-
Exchange- Rate Basis |
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Jewelry sales by product category:
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||||||
Jewelry collections
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—
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%
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(1
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)%
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1
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%
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—
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%
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(2
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)%
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2
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%
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Engagement jewelry
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—
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(1
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)
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1
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(3
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)
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(2
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)
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(1
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)
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Designer jewelry
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1
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—
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1
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(8
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)
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(1
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)
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(7
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)
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Three Months Ended
October 31,
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Nine Months Ended
October 31, |
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2019
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2018
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2019
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2018
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Net sales
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$
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1,014.6
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$
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1,012.4
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$
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3,066.1
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$
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3,121.5
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||||||||
Cost of sales
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388.9
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383.1
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1,163.4
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1,152.5
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Gross profit
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625.7
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629.3
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1,902.7
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1,969.0
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Selling, general and administrative expenses
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507.2
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502.9
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1,439.1
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1,447.1
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Earnings from operations
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118.5
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126.4
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463.6
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521.9
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Interest and other expenses, net
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13.4
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11.9
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31.6
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34.8
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Earnings from operations before income taxes
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105.1
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114.5
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432.0
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487.1
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Provision for income taxes
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26.7
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19.6
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92.1
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105.2
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Net earnings
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$
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78.4
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$
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94.9
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$
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339.9
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$
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381.9
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Net earnings per share:
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Basic
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$
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0.65
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$
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0.78
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$
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2.81
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$
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3.10
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Diluted
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$
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0.65
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$
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0.77
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$
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2.80
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$
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3.08
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Weighted-average number of common shares:
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||||||||
Basic
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120.3
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122.3
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121.0
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123.3
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Diluted
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120.6
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123.1
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121.3
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124.0
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