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Te-Chi Kuo Cheng-Yuan Huang Yu-Te Hung Min-Min Chen Po-Chieh Shih Date: April 24, 2012

Te-Chi Kuo Cheng-Yuan Huang Yu-Te Hung Min-Min Chen Po-Chieh Shih Date: April 24, 2012. Agenda. Introduction Macroeconomics Stock Market Prospect Industry Business Financial Analysis Competitors Comparable Analysis Financial projection Recommendation. Introduction. Introduction.

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Te-Chi Kuo Cheng-Yuan Huang Yu-Te Hung Min-Min Chen Po-Chieh Shih Date: April 24, 2012

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  1. Te-Chi Kuo Cheng-Yuan Huang Yu-Te Hung Min-Min Chen Po-Chieh Shih Date: April 24, 2012

  2. Agenda • Introduction • Macroeconomics • Stock Market Prospect • Industry • Business • Financial Analysis • Competitors • Comparable Analysis • Financial projection • Recommendation

  3. Introduction

  4. Introduction • GICS Map: 25504040 (Specialty Stores) • Current Price: $67.00 (4/23/2012’) • P/E: 19.58 • Forward P/E: 14.60 • Market Cap: 8.41B • 52wk Range: 56.21~84.49

  5. Macroeconomics

  6. Macroeconomics

  7. Macroeconomics– the U.S.

  8. Macroeconomics Source: http://research.stlouisfed.org/fred2/

  9. Stock Market Prospect - Diamond Price $21,000 38% Source: www.ajediam.com

  10. Stock Market Prospect - Gold Price 140% Source: http://www.kitco.com

  11. Industry • Revenue: 30.2B • Annual Growth(11~16):3.1%

  12. Industry

  13. Industry

  14. Industry Source: IBISWORLD

  15. Business - Overview • Tiffany’s business was founded in 1837 by Charles Lewis Tiffany. • Charles Lewis Tiffany incorporated Tiffany in New York in 1868. • The Registrant (Tiffany & Co) acquired Tiffany in 1984 and completed the initial public offering of the Registrant’s Common Stock in 1987.

  16. Business – Product Segment • The Company’s principal product category is jewelry, which represented 91%, 91% and 90% of the Registrant’s net sales in 2011, 2010 and 2009.

  17. Business – Sales Area

  18. Business – Sales Area

  19. Business – Management Strategy • The strategy to expand its worldwide store base, Tiffany & Co plans to add 24 Company-operated stores in 2012. • Nine in the Americas, seven in Asia-Pacific, three in Europe and commence operations of five stores in Emerging Markets.

  20. Business – Business Models • Retail Sales. Retail sales are transacted in Company-operated TIFFANY & CO. stores • Internet Sales. The Company offers a selection of TIFFANY & CO. merchandise for purchase through website. • Business-to-Business Sales. Products drawn from the retail product line and items specially developed are sold to business customers. • Wholesale Distribution. Selected TIFFANY & CO. merchandise is sold to independent distributors for resale.

  21. Business – Business Models

  22. Business – Suppliers and Purchase

  23. Business – Manufacture

  24. Business – Rough Diamonds • Conflict Diamonds. (Blood Diamonds) Tiffany has informed its vendors that the Company does not intend to purchase Zimbabwean-produced diamonds. • Manufactured Diamonds Tiffany does not sell manufactured diamonds.

  25. Business – Designer License • Tiffany has been the sole licensee for jewelry designed by Elsa Peretti and bearing her trademark since 1974. • The designs of Ms. Peretti accounted for 10% of the Company’s net sales in 2011, 2010 and 2009. • A written agreement exists between Ms. Peretti and Tiffany, but it may be terminated by either party following six months notice to the other party.

  26. Business - Licensing Agreements • Tiffany received from licensing agreements with Luxottica Group for the distribution of TIFFANY & CO. brand eyewear and with The Swatch Group Ltd. for TIFFANY & CO. brand watches.  • The earnings received from these licensing agreements represented less than 1% of consolidated worldwide net sales in 2011, 2010 and 2009. 

  27. Business • Driving Forces • Increase the percentage of internally-manufactured jewelry. • increase the number of stores • Diversify the business models • Make licensing agreements to third parties.

  28. Financial Analysis Asset breakdown

  29. Financial Analysis

  30. Financial Analysis

  31. Financial Analysis DuPont Analysis

  32. Competitor source: signet annual report, IBISWorld

  33. Competitor Relevant Stock Market source: yahoofinance.com

  34. Comparable Analysis

  35. Financial projection - Projection under risks Although Tiffany & Co., is the outlier in this industry, she still might be impacted by the following: • Households earning over $100,000 • Consumer sentiment index • Per capita disposable income • Marriage rate • World price of gold • External competition

  36. Financial projection Growth Projection- Base

  37. Financial projection Discount rate for TIF

  38. Recommendation Put it in our watch list unless the price goes below $45

  39. Thanks for listening! Q & A

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