Tiffany Reports Its Holiday Period Sales

NEW YORK–(BUSINESS WIRE)–Tiffany & Co. (NYSE:TIF) reported its sales results for the two months
ended December 31, 2016 (“holiday period”). Worldwide net sales of $966
million were slightly above $961 million a year ago, with sales growth
in Asia-Pacific and Japan largely offset by lower sales in the Americas
and Europe; worldwide comparable store sales declined 2%. On a
constant-exchange-rate basis that excludes the effect of translating
foreign-currency-denominated sales into U.S. dollars (see “Non-GAAP
Measures”), worldwide net sales rose 1% from the prior year and
comparable store sales declined 1%. There were no significant variations
in performance among jewelry categories.

Frederic Cumenal, chief executive officer, said, “These overall holiday
period sales results were somewhat lower than we had anticipated, but we
continue to benefit from a favorable gross margin and prudent expense
management. Although we do not anticipate any significant improvement in
2017 to the macroeconomic challenges that we faced this year, we
continue to focus on our initiatives to enhance our stores and our
customers’ experience, and to add newness to our product assortment,
while maintaining effective marketing communications and a
well-developed supply chain. We believe executing on these initiatives,
which are within our control, will contribute over the long-term to
strengthening Tiffany’s competitive position among global luxury brands.”

Net sales by region were as follows:

• In the Americas, both total sales of $483 million and comparable store
  sales were 4% below the prior year. On a constant-exchange-rate basis,
  total sales declined 4% and comparable store sales declined 3%.
  Management attributed the lower sales to local customer spending, with
  a decline in U.S. sales exacerbated by a 14% decline at the Company’s
  Flagship store on Fifth Avenue in New York, which we attribute at
  least partly to post-election traffic disruptions.
• In the Asia-Pacific region, total sales increased 7% to $200 million
  and comparable store sales declined 4%. On a constant-exchange-rate
  basis, total sales rose 9% and comparable store sales declined 3%.
  Management noted strong growth in retail sales in China and in
  wholesale sales in Korea, but softness in most other markets
  throughout the region.
• In Japan, total sales rose 16% to $143 million and comparable store
  sales rose 21%, which management attributed to higher spending by
  local customers. On a constant-exchange-rate basis, total sales
  increased 8% and comparable store sales rose 12%. Strong retail sales
  growth was partly offset by lower wholesale sales.
• In Europe, total sales of $119 million were 10% below the prior year
  and comparable store sales declined 11%. On a constant-exchange-rate
  basis, total sales were equal to the prior year and comparable store
  sales were 4% below the prior year. Management attributed the sales
  performance to weak demand across continental Europe tied to domestic
  and foreign tourist spending, and noted modest growth in
  local-currency sales in the United Kingdom.
• Other sales of $20 million rose 33% and comparable store sales
  declined 7% reflecting increased wholesale sales of diamonds, offset
  by lower retail sales in the United Arab Emirates (“UAE”).
• At December 31, 2016, the Company operated 314 stores (125 in the
  Americas, 86 in Asia-Pacific, 55 in Japan, 43 in Europe, and five in
  the UAE), versus 307 stores a year ago (125 in the Americas, 81 in
  Asia-Pacific, 56 in Japan, 40 in Europe, and five in the UAE).

Full Year 2016 Outlook:

For the full 2016 fiscal year, (i) management expects earnings per
diluted share to decline by no more than a mid-single-digit percentage
on a GAAP basis, as well as on an adjusted basis (which in 2016 excludes
a charge of approximately $0.13 per diluted share to be recorded in the
fourth quarter of 2016 related to the impairment of capitalized costs
for the development of a replacement of the Company’s finished goods
inventory management system, and, in 2015, excluded loan impairment and
certain staffing and occupancy charges – see “Non-GAAP Measures”); and
(ii) management continues to expect worldwide net sales declining by a
low single-digit percentage from the prior year. These expectations are
approximations and are based on the Company’s plans and assumptions,
including: (i) worldwide gross retail square footage increasing 3%, net
through 11 store openings, 5 relocations and 6 closings; (ii) operating
margin below the prior year due to an anticipated increase in gross
margin more than offset by SG&A expense growth; (iii) interest and other
expenses, net lower than 2015; (iv) an effective income tax rate
consistent with the prior year; (v) the U.S. dollar unchanged at current
spot rates versus other foreign currencies for the balance of the year;
and (vi) weighted average diluted shares outstanding lower than in
fiscal 2015. Management also expects for the full 2016 fiscal year: net
cash provided by operating activities of more than $575 million and free
cash flow (net cash provided by operating activities less capital
expenditures – see “Non-GAAP Measures”) of more than $325 million, both
of which now include a previously-unplanned and voluntary contribution
of $125 million to the Company’s U.S. pension plan. These expectations
are approximations and are based on the Company’s plans and assumptions,
including: (i) net inventories below the prior year, (ii) capital
expenditures of $240 million and (iii) net earnings in line with
management’s expectations described above.

Next Scheduled Announcement:

The Company expects to report its fourth quarter and full year results
on Friday March 17^th before the market opens. To be notified
of future announcements, please register at http://investor.tiffany.com
(“E-Mail Alerts”).

Tiffany is the internationally-renowned jeweler founded in New York in
1837. Through its subsidiaries, Tiffany & Co. manufactures products and
operates TIFFANY & CO. retail stores worldwide, and also engages in
direct selling through Internet, catalog and business gift operations.
For additional information, please visit www.tiffany.com
or call our shareholder information line at 800-TIF-0110.

Forward-Looking Statements:

The historical trends and results reported in this document should not
be considered an indication of future performance. Further, statements
contained in this document that are not statements of historical fact,
including those that refer to plans, assumptions and expectations for
the current fiscal year and future periods, are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are not
limited to, the statements under “Full Year 2016 Outlook” as well as
statements that can be identified by the use of words such as ‘expects,’
‘projects,’ ‘anticipates,’ ‘assumes,’ ‘forecasts,’ ‘plans,’ ‘believes,’
‘intends,’ ‘estimates,’ ‘pursues,’ ‘continues,’ ‘outlook,’ ‘may,’
‘will,’ ‘can,’ ‘should’ and variations of such words and similar
expressions. Examples of forward-looking statements include, but are not
limited to, statements we make regarding the Company’s plans,
assumptions, expectations, beliefs and objectives with respect to store
openings and closings; product introductions; sales; sales growth; sales
trends; store traffic; competitive position; retail prices; gross
margin; operating margin; expenses; interest and other expenses, net;
effective income tax rate; net earnings and net earnings per share;
share count; inventories; capital expenditures; cash flow; liquidity;
currency translation; macroeconomic conditions; growth opportunities;
litigation outcomes and recovery related thereto; the collectability of
amounts due under financing arrangements with diamond mining and
exploration companies; contributions to Company pension plans;
and certain ongoing or planned real estate, product, marketing, retail,
customer experience, manufacturing, supply chain, information systems
development, upgrades and replacement, and other operational and
strategic initiatives.

These forward-looking statements are based upon the current views and
plans of management, speak only as of the date on which they are made
and are subject to a number of risks and uncertainties, many of which
are outside of our control. Actual results could therefore differ
materially from the planned, assumed or expected results expressed in,
or implied by, these forward-looking statements. While we cannot predict
all of the factors that could form the basis of such differences, key
factors include, but are not limited to: global macroeconomic and
geopolitical developments; changes in interest and foreign currency
rates; changes in taxation policies and regulations; shifting tourism
trends; regional instability, violence (including terrorist activities),
election-related or other political activities or events, and weather
conditions that may affect local and tourist consumer spending; changes
in consumer confidence, preferences and shopping patterns, as well as
our ability to accurately predict and timely respond to such changes;
shifts in the Company’s product and geographic sales mix; variations in
the cost and availability of diamonds, gemstones and precious metals;
changes in our competitive landscape; disruptions impacting the
Company’s business and operations; failure to successfully implement or
make changes to the Company’s information systems; gains or losses in
the trading value of the Company’s stock, which may impact the amount of
stock repurchased; and our ability to successfully control costs and
execute on, and achieve the expected benefits from, the operational and
strategic initiatives referenced above. Developments relating to these
and other factors may also warrant changes to the Company’s operating
and strategic plans, including with respect to store openings, closings
and renovations, capital expenditures, information systems development,
inventory management, and continuing execution on, or timing of, the
aforementioned initiatives. Such changes could also cause actual results
to differ materially from the expected results expressed in, or implied
by, the forward-looking statements.

Additional information about potential risks and uncertainties that
could affect the Company’s business and financial results is included
under “Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in the Company’s Annual
Report on Form 10-K for the fiscal year ended January 31, 2016 and
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in the Company’s most recent quarterly report on Form
10-Q. Readers of these documents should consider the risks,
uncertainties and factors outlined above and in the Form 10-K in
evaluating, and are cautioned not to place undue reliance on, the
forward-looking statements contained herein. The Company undertakes no
obligation to update or revise any forward-looking statements to reflect
subsequent events or circumstances, except as required by applicable law
or regulation.

TIFFANY & CO. AND SUBSIDIARIES
(Unaudited)

NON-GAAP MEASURES

The Company reports information in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”). Internally, management also
monitors and measures its performance using certain sales and earnings
measures that include or exclude amounts, or are subject to adjustments
that have the effect of including or excluding amounts, from the most
directly comparable GAAP measure (“non-GAAP financial measures”). The
Company presents such non-GAAP financial measures in reporting its
financial results to provide investors with useful supplemental
information that will allow them to evaluate the Company’s operating
results using the same measures that management uses to monitor and
measure its performance. The Company’s management does not, nor does it
suggest that investors should, consider non-GAAP financial measures in
isolation from, or as a substitute for, financial information prepared
in accordance with GAAP. These non-GAAP financial measures presented
here may not be comparable to similarly-titled measures used by other
companies.

Net Sales

The Company’s reported net sales reflect either a translation-related
benefit from strengthening foreign currencies or a detriment from a
strengthening U.S. dollar. Internally, management monitors and measures
its sales performance on a non-GAAP basis that eliminates the positive
or negative effects that result from translating sales made outside the
U.S. into U.S. dollars (“constant-exchange-rate basis”). Sales on a
constant-exchange-rate basis are calculated by taking the current year’s
sales in local currencies and translating them into U.S. dollars using
the prior year’s foreign exchange rates. Management believes this
constant-exchange-rate basis provides a useful supplemental basis for
the assessment of sales performance and of comparability between
reporting periods. The following table reconciles the sales percentage
increases (decreases) from the GAAP to the non-GAAP basis versus the
previous year:

			Two Months Ended December 31, 2016												Eleven Months Ended December 31, 2016
			GAAP Reported				Translation Effect				Constant- Exchange- Rate Basis				GAAP Reported				Translation Effect				Constant- Exchange- Rate Basis
Net Sales:
Worldwide			—	%			(1	)%			1	%			(3	)%			—	%			(3	)%
Americas			(4	)			—				(4	)			(6	)			(1	)			(5	)
Asia-Pacific			7				(2	)			9				(1	)			(1	)			—
Japan			16				8				8				12				12				—
Europe			(10	)			(10	)			—				(10	)			(6	)			(4	)
Other			33				—				33				—				—				—
Comparable Store Sales:
Worldwide			(2	)%			(1	)%			(1	)%			(5	)%			1	%			(6	)%
Americas			(4	)			(1	)			(3	)			(6	)			—				(6	)
Asia-Pacific			(4	)			(1	)			(3	)			(10	)			(2	)			(8	)
Japan			21				9				12				16				12				4
Europe			(11	)			(7	)			(4	)			(14	)			(4	)			(10	)
Other			(7	)			—				(7	)			(16	)			—				(16	)

Net Earnings

Internally, management monitors and measures its earnings performance
excluding certain items listed below. Management believes excluding such
items provides a useful supplemental basis for the assessment of the
Company’s results relative to the corresponding period in the prior
year. The following tables reconcile certain GAAP amounts to non-GAAP
amounts:

(in millions, except per share amounts)			GAAP					Impairment charges a					Specific cost- reduction initiatives b					Non-GAAP
Year Ended January 31, 2016
Selling, general & administrative expenses			$	1,731.2				$	(37.9	)			$	(8.8	)			$	1,684.5
As a % of net sales			42.2		%													41.0		%
Earnings from operations			760.1					37.9					8.8					806.8
As a % of net sales			18.5		%													19.7		%
Provision for income taxes c			246.0					13.6					3.2					262.8
Net earnings			463.9					24.3					5.6					493.8
Diluted earnings per share			3.59					0.19					0.05					3.83

a		Expenses associated with impairment charges related to a financing arrangement with Koidu Limited.
b		Expenses associated with specific cost-reduction initiatives which included severance related to staffing reductions and subleasing of certain office space for which only a portion of the Company’s future rent obligations will be recovered.
c		The income tax effect has been calculated as both current and deferred tax benefit (expense), based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying item.

Free Cash Flow

Internally, management monitors its cash flow on a non-GAAP basis. Free
cash flow is calculated by deducting capital expenditures from net cash
provided by operating activities. The ability to generate free cash flow
demonstrates how much cash the Company has available for discretionary
and non-discretionary purposes after deduction of capital expenditures.
The Company’s operations require regular capital expenditures for the
opening, renovation and expansion of stores and distribution and
manufacturing facilities as well as ongoing investments in information
technology. Management believes this provides a useful supplemental
basis for assessing the Company’s operating cash flows.

TIF-E

Contacts

Tiffany & Co.
Mark L. Aaron, 212-230-5301
mark.aaron@tiffany.com