Sara The Firms margins depends on the effectiveness of performing these opperations. Ie … the cost the customer is willing to pay for the final goods is better than the cost of the vaule chain. – speaks to the core competencies of the firm.
Sara Porter has 10 cost advantages – only some are relevant to tiffany and co
Susan
Susan
Susan
Susan
Susan Notes Opening 17 new company operated stores with a higher concentration in the Asia Pacific region .
Susan. Tiffany and Co is in the mature stage of the industry life cycle. During the 1970’s to 1990’s there was a large growth in the specialty retail industry with the development of shopping malls across the U.S. Over the past decade there has been a shift towards internet sales and Mass merchandisers. Tiffany is currently implementing strategies to stay competitive and stimulate other market segments such as the lower cost silver jewelry line.
Susan- Christina was going to put an X or something where Tiffany should be here but otherwise self explanatory. At the maturity phase of specialty retail market.
Christina: For the year sales dropped 5% to 2.71B but earnings from operations increased to $265.7M from $232.2M the prior year due to aggressive cost cutting measures. Expenses rose 7% due to higher incentive compensation management. Tiffany realizes the importance of keeping key management in place to help minimize any growing pains for the company. Balance sheet liquidity has increased to 786M from 160M a year ago. Asia Pacific sales rose 14% due to strong growth in all countries except Japan
Christina - As you can see in this graph from 2008-2010 Jewelry and watch sales have had a much stronger recovery than retail sales in general and are showing close to a 20% increase during the holiday season.
Christina - This graph summarizes specialty jewelers’ sales trends for the past fifteen months. Specialty jewelers merchants whose primary business is selling jewelry – posted a solid sales gain in January 2010 of 8.2%. Three factors likely drove this gain: 1) demand for jewelry was strong in the 2009 holiday selling period, and the momentum carried into January; 2) consumers are seeking “something different” that can only be found at specialty jewelers; and 3) specialty jewelers are doing a better job of communicating their value proposition.
Christina- Results from first Quarter 2010 companies net sales increased 17% to 981.4M compared with 837.6 in last years 4 th quarter. Tiffany’s planned capital spending has increased to 200M from 75M last year showing the effect of last years cost cutting measures and allowing for expansion in 2010. In the US, luxury spending rose 15 per cent from January to February. Year end stock prices show a nice recovery in 2009 from 23.63 at the end of 08 to 43.09 at the end of 09. Current stock value is at $49.79.
Christina: Management intends to expand distribution by adding stores in both new and existing markets. Management recognizes that over-saturation of any market could diminish the distinctive appeal of the Brand, but believes that there are a significant number of locations remaining worldwide that meet the requirements of the Brand. Company has opened smaller size stores which have contributed to higher store productivity. In addition, the Company is focused on growing sales per square foot by increasing consumer traffic and the conversion rate through targeted advertising, ongoing sales training and customer-focused initiatives. Management’s long-term objective is to improve gross margin through greater product manufacturing/sourcing efficiencies and increased use of distribution center capacity. Management also intends to improve the ratio of selling, general and administrative expenses to net sales by controlling expenses and enhancing productivity. The Brand is the single most important asset of the Company and management will continue to invest in marketing and public relations programs designed to increase customer awareness, and will continue to monitor the strength of the Brand through market research. The Company continues to invest in product development in order to introduce new collections and add new and innovative products to existing lines. The Company will continue to seek additional sources of diamonds which, combined with its internal manufacturing operations, are intended to secure adequate product supplies and favorable costs. Company will continue to provide superior customer service by employing highly qualified sales and customer service professionals and maintaining ongoing training programs.
Christina: Management intends to expand distribution by adding stores in both new and existing markets. Management recognizes that over-saturation of any market could diminish the distinctive appeal of the Brand, but believes that there are a significant number of locations remaining worldwide that meet the requirements of the Brand. Company has opened smaller size stores which have contributed to higher store productivity. In addition, the Company is focused on growing sales per square foot by increasing consumer traffic and the conversion rate through targeted advertising, ongoing sales training and customer-focused initiatives. Management’s long-term objective is to improve gross margin through greater product manufacturing/sourcing efficiencies and increased use of distribution center capacity. Management also intends to improve the ratio of selling, general and administrative expenses to net sales by controlling expenses and enhancing productivity. The Brand is the single most important asset of the Company and management will continue to invest in marketing and public relations programs designed to increase customer awareness, and will continue to monitor the strength of the Brand through market research. The Company continues to invest in product development in order to introduce new collections and add new and innovative products to existing lines. The Company will continue to seek additional sources of diamonds which, combined with its internal manufacturing operations, are intended to secure adequate product supplies and favorable costs. Company will continue to provide superior customer service by employing highly qualified sales and customer service professionals and maintaining ongoing training programs.
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