New York City Tiffany & Co. said on Monday that its fourth-quarter profit tumbled more than 75%.
Tiffany said it believes its sales were hurt by the discounts offered by other jewelers and high-end competitors. Although competition among jewelers remains intense, Tiffany still plans to maintain its prices to protect its cachet, the company said.
"We did and will continue with our full-price philosophy in order to maintain appropriate margins and, very importantly, to maintain the integrity of the Tiffany & Co. brand," CFO Jim Fernandez said during a conference call with analysts.
About 600 of Tiffany's U.S. employees accepted an early retirement package during the fourth quarter, which the company expects will help reduce its worldwide staff by 10% and save about $60 million before taxes this year.
Tiffany said its earnings dropped to $31.1 million for the three months ended Jan. 31, down from $127.4 million a year ago.
Sales dropped 20% to $841.2 million, from $1.05 billion in last year's fourth quarter. At Tiffany's flagship store on Fifth Avenue in New York City, sales dropped 34%. The store represents 10% of total sales.
Same-store sales dropped 23%, excluding the impact of foreign currency exchange. Tiffany said a 33% drop in same-store sales in the Americas drove the decline.
Tiffany plans to open 13 stores this year, down from 22 new stores in 2008. It will open seven in the Asia-Pacific region in addition to stores in the United States, Canada, Mexico and Europe.
For the full fiscal year, Tiffany's profit fell to $220 million, from $323.5 million a year ago. The results included an after-tax charge of $22.6 million related to the sale of its Little Switzerland business, the company said.