Tiffany & Co.
Tiffany & Co.
headquarters: 600 madison ave.
new york, ny 10022 phone: (212)755-8000 fax: (212)230-6633 url: http://www.tiffany.com
Founded more than 160 years ago and the nation's preeminent jeweler for more than 50 years, Tiffany & Co. is a uniquely American symbol of elegance and style. Tiffany pioneered what would become a classic engagement ring style, the raised solitaire diamond, six-prong "Tiffany Setting." Tiffany has catered to everyone from the likes of Presidents, including Abraham Lincoln and John F. Kennedy; European royalty; preeminent American families, including the Vanderbilts and the Astors; and various celebrities. The company's trademarked Tiffany Blue Boxes and shopping bags have become familiar and enduring American icons of wealth and luxury to this day.
Tiffany & Co.'s main product lines are fine jewelry, timepieces, sterling silver goods, crystal, china, writing instruments, fragrances, and personal accessories. Jewelry accounts for a majority of the company's sales, at 78 percent in fiscal 2000. Tiffany's products can be acquired through its three areas of distribution: the company's 125 branch stores in the United States and worldwide, its trademarked Tiffany blue catalog, and the company's Web site, which offers about 1,350 products. Marketing, merchandising, distribution, and customer service are the keys to the company's growth. Product development is an important part of that strategy, introducing new products such as the Lucida diamond engagement ring, three-stone rings, and band rings, and distributing them worldwide in 2000. Tiffany's longstanding mission has to be being "the world's most respected jewelry retailer" and key beliefs are what drive the company's strategy. These beliefs include that Tiffany is not just a brand name, but a physical location where customers can experience products in person and experience excellent service. More than just a retailer, Tiffany is also a manufacturing jeweler, with craftsman-ship and design at the core of the business and serving as the competitive edge. As a product-driven company, Tiffany believes that the product is the "hero," and its blue box a representation of the company's unwavering focus on products of superior quality, value, and design. Finally, the company also believes that the superiority of its products and service drive its success. To that point, the company's 2000 annual report states, "Our strategies have never been about fashion or luxury or excess. And therein lies the secret of their longevity and sustainability. Tiffany is about things that last."
Tiffany & Co. brand jewelry accounts for more than 75 percent of the company's sales. Tiffany's flagship Fifth Avenue store in New York accounted for approximately 12 percent of the company's sales in 2000. U.S. retail sales as a whole, at $833.2 million, made up 50 percent of the company's total net sales of $1.66 billion in 2000. Worldwide, net sales totaled $679.2 million and accounted for 41 percent of Tiffany's total net sales, with Japan representing about 28 percent of net sales Tiffany that made internationally in 2000. Direct marketing made up the remaining 9 percent of total net sales that year at $155.5 million. The company's sales dipped by 3.7 percent in 2001, ending the year at $1.60 billion, with net income also decreasing nearly 9 percent to $173.6 million.
Domestic sales increased 12 percent in 2000 and 25 percent in 1999. Similarly, international retail sales rose 15 percent in 2000 and 27 percent in 1999. Net earnings rose 31 percent in 2000 and have grown at a 37 percent compound annual growth rate in the past five years. Tiffany stock ranged from a low of $19.90 to a high of $39.01 over a 52-week period. The annual dividend was four cents per share and Tiffany's price-earnings ratio was 31. The company estimates that it will experience moderate 2002 growth of five to nine percent in 2002.
The year 2000 saw the company raise the quarterly dividend rate for the fifth consecutive year. Due to the company's past success and favorable outlook, Tiffany & Co. was added to Standard & Poor's S&P 500 Index. Despite the challenging economic climate for high end businesses in 2001, several analysts remained positive on Tiffany stock. Merrill Lynch recommended the stock in a January 2002 report, believing that the company will perform better than other high-end retailers, noting the company's variety of products at various prices, its strong brand positioning, healthy Japanese sales, and its emphasis on expanding its watch collection. Lehman Brothers reported that due to Tiffany's better than expected 2001 holiday sales and continued positive outlook, the company would raise its earnings estimates for early 2002. Salomon Smith Barney similarly raised its earning estimates for Tiffany due to its 2001 holdiay sales, its plans to open three additional stores in 2002, and a new jewelry-only store model that would bring higher sales per square foot. Morgan Stanley maintained its Neutral rating on the company, citing a slowdown in tourist sales, a drop in Japanese sales, and a recent run-up in shares, as reasons.
On September 18, 1837, with a thousand dollars borrowed from his father, Tiffany and friend John B. Young opened Tiffany & Young at 259 Broadway in New York City. The store originally sold stationery supplies and fancy goods, including costume jewelry. Business conditions were less than ideal at the time with the Panic of 1837 and some thought the company's uptown location would be bad for patronage. The first three days of sales totaled $4.98, but after that rocky start, the business soon took off. Tiffany's store was unique for its time, offering fixed prices on items, thus removing the bartering process. The company also refused to extend credit to customers, which had become a problem for many businesses of the day. By 1839 Tiffany added glassware, cutlery, porcelain, and clocks to the company's line of products.
The company soon had a new partner, J. L. Ellis, and then became known as Tiffany, Young & Ellis. With the funds Ellis brought to the firm, the company was able to rent the adjoining room, doubling its floor space. Ellis, who brought strong experience in the European jewelry market, became the company's chief overseas operator after his buying trip to the Continent. In 1844 the company was importing quality Italian and English jewelry, adding to its already well-respected reputation. That year the company discontinued its costume jewelry line as demand for the imported gems escalated along with their reputation for offering expensive, quality pieces. The company, which focused very little on gems at the time, published its first catalogue in 1845 that some speculate was the country's first mail-order catalogue.
The company's trademark shade of robin's egg blue was also established during the early years of the company and appeared on all company catalogues, shopping bags, boxes, and promotional materials. Regarding the now familiar Tiffany Blue boxes, the company's Web site quoted a 1906 article in the The New York Sun: "Tiffany has one thing in stock that you cannot buy of him for as much money as you may offer; he will only give it to you. And that is one of his boxes. The rule of the establishment is ironclad, never to allow a box bearing the name of the firm, to be taken out of the building except with an article which has been sold by them and for which they are responsible." The tradition has continued to this day, with the Tiffany Blue boxes becoming a symbol of elegance and sophistication.
FAST FACTS: About Tiffany & Co.
Ownership: Tiffany & Co. is a publicly owned company traded on the New York Stock Exchange.
Ticker Symbol: TIF
Officers: William R. Chaney, Chmn., 68; Michael J. Kowalski, Pres. and CEO, 49; James E. Quinn, VChmn., 49; Beth O. Canavan, EVP, 46; James N. Fernandez, EVP and CFO, 45; Victoria Berger-Gross, SVP, Human Resources, 45; Patrick B. Dorsey, SVP, Gen. Counsel and Sec., 50; Linda A. Hanson, SVP, Merchandising, 40; Fernanda M. Kellogg, SVP, Public Relations, 54; Caroline D. Naggiar, SVP, Marketing, 43; John S. Petterson, SVP, Direct Marketing, 42
Principal Subsidiary Companies: Tiffany & Co. operates approximately 125 branch stores in the United States, Canada, Mexico, Europe, Japan, and elsewhere worldwide.
Chief Competitors: Tiffany & Co. competes with other jewelers and retailers based on quality and value, unlike companies who compete mainly through advertised price promotion. Competition from other companies is significant throughout all of Tiffany's brands, some who specialize in just one area of Tiffany's many product lines. Some of Tiffany's main competitors include Rolex, Bulgari, and Cartier.
In 1847 the company also began selling silverware. The following year, the company benefited from revolutionary movements in Europe, enabling Tiffany's to acquire historic European jewels from important aristocrats over the next several decades, including some of crown jewels from the French Empire in 1887 when the pressed dubbed Tiffany the "King of Diamonds." After the European acquisitions, the company's reputation greatly broadened. In 1850 Tiffany opened another store in Paris and hired John C. Moore, a silversmith, to craft silverware exclusive to Tiffany's and also began manufacturing gold jewelry, aided by the California gold strike in 1850. Tiffany was the first U.S. company to use the 925 parts silver per thousand standard for sterling that later became the United States Sterling Standard. The company underwent another reorganization when Tiffany's partners, Young and Ellis, retired and, in 1853, the company was renamed Charles L. Tiffany & Company. Tiffany had a huge statue of Atlas beneath a clock installed at the company's new headquarters at 550 Broadway. The statue, which moved three more times, may still be seen above the company's Fifth Avenue store entrance.
Tiffany was skilled in promotion, and steered the company to further growth throughout the rest of the 1850s. Tiffany was able to generate publicity for his company in association with P.T. Barnum on several occasions. Once he crafted a special jeweled horse and carriage as a wedding gift for the marriage of Barnum's Tom Thumb. The most publicized promotional event occurred in 1858 when Tiffany's sold sections of the first transatlantic cable as souvenirs; this generated so much interest that the police were called to keep frenzied buyers in line. In 1861 Tiffany was hired to design a presentational pitcher for the inauguration of President Abraham Lincoln. President Lincoln later gifted wife Mary Todd Lincoln with a seed-pearl jewelry suite from Tiffany's.
In support of the Union forces during the ensuing Civil War, Tiffany manufactured patriotic items, including flags, medals, surgical implements, and swords, and he allowed his store to serve as a depot for military supplies. Tiffany also designed jewel-encrusted presentation swords for Generals Grant and Sherman. After the war, the company, which was incorporated in 1868, opened a London store that year. Tiffany, who served as the company's president and treasurer, also found a building for its New York operations on Fifth Avenue after several other sites were tried. In addition to jewelry, the company also then began producing clocks and watches.
As the company's reputation for quality and excellence grew, Tiffany attracted more than 20 crowned heads of state among its worldwide range of customers. In 1867 Tiffany's was the first American company to win the gold medal for jewelry and the grand prize for silverware at the Paris Exposition. The company opened a factory in Newark, New Jersey, which produced Tiffany's silverware, stationery, and leather goods. Tiffany-designed copper, silver, and niello pitchers were acquired by the Boston Museum of Fine Arts, the first of many of the company's designs currently in museum collections worldwide. Charles Tiffany continued to enhance his company's reputation by acquiring the 128.54 carat fancy yellow Tiffany Diamond in 1878, one of the largest diamonds of its kind in the world. It was later worn by Audrey Hepburn in publicity photos for the 1961 movie classic, Breakfast at Tiffany's. The gem can be seen to this day on the first floor of Tiffany's Fifth Avenue store.
Innovative jewelry design became a Tiffany trademark early on. The 6-prong diamond solitaire engagement ring was created using the "Tiffany Setting," which raised the stone up from the setting, thus allowing the maximum amount of light to set off the diamond's brilliance. Tiffany's son, Louis Comfort Tiffany, established a special department within the company called Tiffany Art Jewelry in 1902.
Charles Tiffany died of pneumonia on February 18, 1902, in Yonkers, New York. At the time of his death, his personal fortune was valued at $35 million and the company was capitalized at $2.4 million. Son Louis took the position of vice president and artistic director of Tiffany & Co. after his father's death and became an accomplished jeweler in addition to the fame he would later acquire for designing stained glass.
CHRONOLOGY: Key Dates for Tiffany & Co.
Charles Lewis Tiffany and John Young established Tiffany & Young
Tiffany's published its first catalogue
Began making silverware exclusive to Tiffany's
Company renamed Tiffany & Co. after his partners retire
First American firm to win an award for its silverware at the Paris Exposition
Purchased the 128.54 carat Tiffany Diamond
Introduced the "Tiffany Setting"
Acquired some of the French Crown jewels
Tiffany & Co. moves to Fifth Ave. and 37th in New York, which became a National Landmark in 1978
Tiffany's platinum became the official standard for all platinum in the United States
Tiffany makes its final move to its current location at Fifth Ave. and 57th in New York
The company introduced Tanzanite, a unique blue gemstone, to the world
Tiffany goes public on the New York Stock Exchange
Tiffany creates the Lucida engagement ring
In 1905 the store moved again, to a sixteenth century Venetian-style building on Fifth Avenue at 37th, which later became a National Landmark in 1978. In 1940 the company moved its New York headquarters to its own building, designed by Cross & Cross, on Fifth Avenue and 57th Street, where it exists today. The company, which went public on the New York Stock Exchange in 1986, continued after Tiffany's death to set standards in the jewelry industry: In 1926 Tiffany's platinum became official standard for all platinum in the United States; the company introduced Tanzanite, a unique blue gemstone to the world in 1969; and the company innovated a new engagement ring, the Lucida, with a patented cut in 1999.
The company's ongoing strategy is to open three to five new U.S. stores per year and open stores in selected locations internationally. Tiffany is also renovating its Manhattan store throughout a three-year period to increase selling space by 25 percent. To ensure ongoing quality, Tiffany plans to expand internal manufacturing and develop existing relationships with external suppliers with the goal of maintaining a healthy product development program and support the distribution of existing products.
Tiffany makes use of a wide variety of channels to reach prospective customers, including advertisements in magazines, newspapers, television, catalogs, and the Internet in order to ensure that they go to Tiffany for luxury products and a superior shopping experience. Through these advertisements, Tiffany seeks to communicate the relevance of the company and its products in the consumer's life. Promotional activities remain an important aspect of Tiffany's business in order to maintain consumer awareness. The company's annual Blue Book displays Tiffany fine jewelry and other wares; its New York store's window displays aid in the company's promotional efforts; and Tiffany Design Director John Loring has authored several books featuring the company's products. The company spent approximately $65 million on worldwide advertising in 2000.
Since Breakfast at Tiffany's, the 1961 movie that prominently featured the company, Tiffany has continued to reap promotional benefits through the medium of film. The company's new Tiffany Lace collection of platinum and diamond jewelry was exclusively worn by movie star Julia Roberts in the 2001 film Ocean's Eleven. Other Tiffany accessories, including a watch and cuff links from the Tiffany Atlas collection, were worn by the another of the film's stars, Andy Garcia. The company has also expanded its Internet product selection, enhanced the site's overall functionality, and created an online bridal registry.
To focus wholly on company-operated stores and increase profitablity, Tiffany has eliminated wholesale trade and fragrance distribution, including the sale of its products in department stores and non-company-owned jewelers in the United States and Europe. Tiffany's goal is to distribute only through company-operated stores in significant markets and through direct selling. In keeping with that decision, Tiffany plans to open three to five new stores in the United States each year, as well as one to two new locations per year, and expanding or renovating existing stores in Japan, along with opening additional stores worldwide. Plans for 2002 included opening stores Bellvue, Washinton; St. Louis, Missouri; and Orlando, Florida. Tiffany's will also open a large jewelry manufacturing center in Rhode Island in order to meet future demand for products.
In addition to the wide variety of Tiffany brand jewelry, the company offers products in various categories, including timepieces and clocks; sterling silver products, including flatware, hollowware, trophies, key holders, picture frames, and desk accessories; stainless steel flat-ware; crystal, china, glassware, and tableware; writing instruments; custom engraved stationery; and fashion accessories. The company also sells other brands of table-ware and timepieces in the United States and is the sole licensee for jewelry designed by Paloma Picasso, Elsa Peretti, and Jean Schlumberger. Fragrances include Tiffany, Trueste, and Tiffany for Men. The company also sells a line of commercial glassware under the Judel trademark.
The 2000 Lucida three-stone and band rings were created to build on U.S. success of the 1999 Lucida engagement ring, and its distribution was extended worldwide. The Streamerica and Petal jewelry collections, Palladium dinnerware, and the company's first stainless steel flatware collection were also introduced in 2000. To commemorate the twentieth anniversary of Tiffany's relationship with Paloma Picasso, a new line of her designs were launched that year. In 2001 the Tiffany Lace collection was featured in the film Ocean's Eleven, worn by star Julia Roberts. The line was inspired by designs from the company's archives, including necklaces designed by Louis Comfort Tiffany from 1906-1910.
Tiffany believes that its company image benefits from its charity sponsorships, grants, and merchandise donations. The Tiffany & Co. Foundation is a private foundation designed to support other charitable organizations with a focus on the preservation and conservation of the arts.
With international sales accounting for 41 percent of Tiffany's 2000 total sales of $1.66 billion and Japan representing about 28 percent of net sales made internationally in 2000, Tiffany believes that the name Tiffany & Co. is known internationally. Although Tiffany operated retail outlets in London and Paris before World War II, the company did not re-establish stores in Europe post-war until 1986 and accordingly, awareness of the brand is not as high as in the United States or Japan. As of 2000 the company had approximately 42 U.S. stores, 4 in Canada and Mexico, 8 in Mexico, 44 in Japan, and 21 elsewhere. Leading Japanese department store Mitsukoshi and Mitsukoshi operated 27 of Tiffany's boutiques there, and the success of the somewhat declining department store industry in Japan will have a major impact on Tiffany's growth in that country. Tiffany plans to continue to open stores internationally. Plans for 2001 included opening three new boutiques in Japan, one in Melbourne, Australia, one in Sao Paulo, Brazil, one store in Rome and one new London store.
DIAMONDS ARE A GIRL'S BEST FRIEND
Although Holly Golightly might not have gotten the Tiffany diamond she craved, film legend Audrey Hepburn, who played the character in the 1961 film, Breakfast at Tiffany's, was indeed lucky enough to wear not just a Tiffany diamond, but the Tiffany Diamond, albeit briefly, during a publicity shoot for the movie. The Tiffany Diamond, discovered in the Kimberley diamond mines in South Africa in 1877, is among the world's largest fancy yellow diamonds. Purchased by Charles Lewis Tiffany in 1878, it may be seen today on the first floor of Tiffany's flagship Fifth Avenue store in New York. The rough diamond crystal was 287.42 carats before it was cut into a cushion-shaped brilliant diamond, weighing in at 128.51 carats and featuring 90 facets—which exceeds the facets of a traditional brilliant-cut stone by 32 facets.
Tiffany employs approximately 5,950 full- and part-time personnel, with 4,932 located in the United States. Salaried employees numbered 2,250; 572 persons were employed in manufacturing; and 2,887 were employed in retail stores. No Tiffany employees are represented by a union.
SOURCES OF INFORMATION
"about tiffany." tiffany & co., 2002. available at http://www.tiffany.com.
"tiffany & co." gale group, 2002. available at http://www.galenet.galegroup.com.
"tiffany & co." hoover's online, march 2002. available at http://www.hoovers.com.
"tiffany & co. adorns ocean's eleven star julia roberts in dazzling jewels including new tiffany lace." business wire, 6 december 2001.
"tiffany announces plans to open stores in bellevue, st. louis, and orlando." business wire, 8 january 2002.
For an annual report:
on the internet at: http://www.tiffany.comor write: tifffany & co., 727 fifth ave., new york, ny 10022
For additional industry research:
investigate companies by their standard industrial classification codes, also known as sics. tiffany & co.'s primary sic is:
5944 jewelry stores
also investigate companies by their north american industry classification system codes, also known as naics codes. tiffany & co.'s primary naics code is:
448310 jewelry stores