I. Executive summary
Tiffany & Co. is a holding company and conducts all business through its subsidiary companies. The Company’s principal subsidiary, Tiffany and Company (Tiffany & Co.), is a jeweler and specialty retailer whose principal merchandise offering is fine jewelry. The Company also sells timepieces, sterling silverware, china, crystal, stationery, fragrances and accessories. Through Tiffany & Co. and other subsidiaries, the Company is engaged in product design, manufacturing and retailing activities. Tiffany’s business plan includes many expenses and strategies to maintain the strength of the Brand, includes that stores must be staffed with knowledgeable professionals to provide excellent service, elegant store and online environments increase capital and maintenance costs and display practices require sufficient store footprints and lease budgets to enable Tiffany to showcase fine jewelry in a retail setting consistent with the Brand’s positioning. Stores in the best “high street” and luxury mall locations are more expensive and difficult to secure, but reinforce the Brand’s luxury connotations through association with other luxury brands. On the other hand, maintaining its position within the high-end of the jewelry market requires Tiffany to invest significantly in diamond and gemstone inventory and accept reduced overall gross margins; it also causes some consumers to view Tiffany as beyond their price range.
Based upon the information from Tiffany & Co.’s four reportable segments, Americas, Asia-Pacific, Europe and Other, even though the recession of current worldwide economies continue, economic resurgence is considerable and the consumer confidence recovers gradually as the market expects. Since Tiffany & Co. is operating an international business, the temporary unfavorable performance in the U.S. market will not have a negative effect on its objective as a whole, and the expansion of its operations could be expected to carry on....