Tiffany's 4Q profits decreased by 76%

Sales in the US were the worst hit
Tiffany's 4Q profits decreased by 76%

For Tiffany & Co., profits in the fourth quarter ending January 31, 2009 decreased by 76 percent to $31.1 million. The main dip in profits was observed in the US markets. In the said three months, sales had dipped by 20 percent to $841 million. In the U.S. same-store sales dropped by 33 percent, while total sales slipped down by 30 percent. In the Asia-Pacific region comparable store sales were down by 13 percent and were flat in the European markets.

The company has been implementing various cost conscious measures in the past year due to economic slowdown. According to reports, it took a one-time pretax charge of $97.8 million for an early retirement programme and cut staff in the said quarter. It gave around 800 employees an early retirement, of which 600 took it. Also it took a $7.5 million pretax charge for the probable closure of its Iridesse retail operations, $12.4 million were for writing 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. The company is of the view that with a 10 percent cut in its staff it would save around $60 million as pretax savings in the current year.

The lowered sales resulted in 17 percent hike in the net inventories in the fiscal year, amounting to $1.6 billion. Inventories also went up due to the launch of new Tiffany stores. The company’s full fiscal year profits dropped by 32 percent to $220 million and sales dipped by 3 percent to $2.9 billion.


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