Tiffany & Co. reported its financial results for the full year and the fourth quarter ended January 31, 2016.
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Throughout the year, results were pressured by the strong U.S. dollar, which had a negative effect on the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S., as well as, to varying degrees, the effects of macro-economic challenges and uncertainties on consumer spending.
Management issued its projections for 2016 (fiscal year ending January 31, 2017) calling for minimal growth in net sales on a constant-exchange-rate basis, and net earnings ranging from unchanged to a mid-single-digit decline compared with $3.83 in 2015, and free cash flow of at least $400 million.
In the full year
On a constant-exchange-rate basis, worldwide net sales rose 2% due to higher sales in Asia-Pacific, Japan and Europe and comparable store sales were equal to the prior year. Reported in U.S. dollars, worldwide net sales declined 3% to $4.1 billion.
Net earnings of $493.8 million, or $3.83 per diluted share (excluding pre-tax charges of $37.9 million for two impairments of a loan made to a diamond mining company and $8.8 million for staffing and occupancy reductions) were 9% lower than last year's $545.1 million, or $4.20 per diluted share, which had excluded a debt extinguishment charge; the decline was due to lower sales and higher selling, general and administrative (SG&A) expenses partly offset by a higher gross margin.
On a reported basis, which included the charges in both years, net earnings per diluted share of $3.59 were 4% below the prior year.
In the fourth quarter
On a constant-exchange-rate basis, worldwide net sales declined 2%, reflecting lower sales in the Americas and Asia-Pacific and sales growth in Japan and Europe and comparable store sales declined 5%. Reported in U.S. dollars, worldwide net sales of $1.2 billion were 6% lower than the prior year.
Net earnings of $186.8 million, or $1.46 per diluted share (excluding pre-tax charges of $28.3 million for impairment of a loan made to a diamond mining company and $8.8 million for staffing and occupancy reductions, declined from $196.2 million, or $1.51 per diluted share in the prior year; the decline reflected a lack of sales leverage on higher selling, general and administrative expenses partly offset by a higher gross margin.
On a reported basis, net earnings were $1.28 per diluted share. ■