For the year, net sales dropped 5 per cent, to $2.71bn, as comparable-store sales adjusted for exchange rate changes declined 8 per cent. Net earnings, however, rose to $265.7m from $232.2m on the back of an aggressive campaign by management to cut expenses.
“Notwithstanding the global economic challenges over the past year, the decisive measures we took to control spending were successful,” said Michael J Kowalski, chairman and chief executive. The company pointed to “increased wholesale sales of rough diamonds that generate minimal, if any, profit” as an explanation for decline in per-sale earnings in the fourth quarter. Gross margins declined from from 59.4 per cent the prior year to 58.7 per cent in 2009.
Tiffany also said expenses rose 7 per cent in the fourth quarter due to higher incentive compensation for management. It had cut expenses earlier in the year through reductions in staffing and marketing.
Japan, where it sells jewellery mostly through department stores, has been the most disappointing market recently for Tiffany. Comparable-store sales rose only 3 per cent in the Asia-Pacific region in the fourth quarter, versus increases of 11 per cent in North America and 14 per cent in Europe.
