Tiffany Comments on Its Japanese Business

On Tiffany's Fiscal 2Q conference call, Vice President, Mark Aaron discusses increasing sales, renovation of boutiques and the introduction of the Tiffany Novo Collection in Japan:

Mark Aaron - Vice President, Investor Relations

Japan now represents approximately half of Tiffany’s international sales. Total retail sales in Japan increased 6% in the quarter, due to an increase in average jewelry price and mix. Comparable store sales from Japan rose 2% in the quarter, which was below our expectation and compared with a 1% increase a year ago.

In terms of the monthly results during the quarter, comps increased 4% in May, on top of a 5% decline in May last year, rose 6% in June on top of a 2% increase, and declined 4% in July, compared with a 5% increase in July 2005. As noted in today’s press release, comps in August to date have posted a high single-digit decline.

Geographically, the 2% comp increase in the second quarter was comprised of similar increases in Tokyo and outside Tokyo. The Ginza flagship store, rose 1%.

We opened two boutiques in Japan in the first quarter, in Mito and Yonago, and closed one in Tottori in the second quarter. We also recently announced plans to open a freestanding store in November in the important Roppongi Hills section of Tokyo, which is a key centre of luxury retail activity.

We are continuing to pursue attractive opportunities to expand and enhance Tiffany’s distribution base in Japan. Two current examples:

1. We will soon complete a remerchandising of our Ginza flagship store and will highlight the change with a special bridal event, and the introduction of the Tiffany Novo Collection, a new brilliant cushion cut solitaire diamond ring. Building on our successful engagement jewelry business, Tiffany Novo will be exclusive to the Ginza flagship store in September and then rollout to the rest of Japan in October, followed by other international markets and the U.S. in early 2007;
2. A complete renovation of Tiffany’s boutique in Mitsukoshi’s Ginza store will be completed in September, as part of Mitsukoshi’s overall renovation of that important store. We expect sales results to benefit from these initiatives.

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