Tiffany & Co. (NYSE:TIF) Q4 2014 Earnings Conference Call - Final Transcript

Mar 20, 2015 • 08:30 am ET

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Tiffany & Co. (NYSE:TIF) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone and welcome to the Tiffany & Company Fourth Quarter Conference Call. Today's call is being recorded. Participating on today's call is Mr. Frederic Cumenal, President, Mr. Ralph Nicoletti, Executive Vice President and Chief Financial Officer, and Mr. Mark Aaron, Vice President of Investor Relations.

At this time, I'd like to turn the call over to Mr. Mark Aaron. Please go ahead, sir.

Executive
Mark Aaron

Thank you. Greetings from New York, and hello everyone. We reported Tiffany's fourth quarter and full year results this morning and I presume you've already had a chance to review the news release. On today's call, Ralph and I will comment on those results and Tiffany's 2015 plans and outlook. And we are pleased to have Frederic join us, to wrap up the call with some strategic observations.

Before continuing, please note that statements made on this call that are not historical facts are forward-looking statements. Actual results might differ materially from the expectations projected in those forward-looking statements. Additional information concerning risk factors that could cause actual results to differ materially is set forth in Tiffany's Form 10-K, 10-Q and 8-K reports filed with the Securities and Exchange Commission. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

Okay. Let's begin with an overview of fourth quarter results. Sales performance by region was mostly inline with the holiday sales results we've reported on January 12. Net worldwide sales in the fourth quarter declined 1% but rose 3% on a constant exchange rate basis that excludes the translation effect of the stronger US dollar. We expect to see a continuation of that substantial headwind from the strong dollar in 2015.

In local currencies we were pleased that Tiffany performed well in Europe and Asia Pacific and not surprised that we experienced softness in Japan. However, we were disciplined with the underperformance in the Americas. Also in the fourth quarter the operating margin was down slightly from last year's margin excluding the charge, while growth margin increased in the quarter the improvement was offset by higher marketing spending and deleveraging of SG&A fixed costs.

Interest and other expenses net were above last year but the prior year included a one time foreign currency transaction gain. The effective tax rate was below last year. So in total net earnings of a $1.51 per diluted share in the fourth quarter was up slightly from last year's $1.47 excluding charges and at the high end of the forecast we provided in January. For all of 2014, worldwide net sales rose to $4.25 billion. That represented a 5% increase in dollars or a 7% increase on a constant exchange rate basis which was on top of a 10% increase in 2013 on that same basis.

Net earnings for the full year rose 167% to $484 million or $3.73 per diluted share. However, on an apples-to-apples basis excluding charges in both years, net earnings rose 13% and EPS of $4.20 was slightly better