Looking to offset declining sales and profits, luxury jeweler Tiffany & Co. has offered “voluntary retirement incentives” to about 800 U.S. employees.
This story first appeared in the December 3, 2008 issue of WWD. Subscribe Today.
The number represents about 9.1 percent of Tiffany’s global workforce of 8,800 and 13.3 percent of the 6,000 it employs in the U.S.
The New York-based retailer said in a Securities and Exchange Commission filing that it expects to record a pretax, nonrecurring charge of $50 million to $65 million in the fourth quarter of fiscal 2008 as a result of the cuts. The final amount of the charge will depend on the number of eligible employees who accept the packages.
“Could there be other adjustments to staffing? Yes, there could be,” Mark Aaron, Tiffany’s vice president of investor relations, told WWD.
Aaron said the company expects to finalize plans to further adjust staffing levels by the end of the fourth quarter. He declined to comment on the number of employees Tiffany expects to accept the retirement offer.
The incentive, which includes “increased age and service credit for pension purposes, severance payments, enhanced retirement health care benefits and accelerated vesting and extended exercise rights for equity grants now outstanding,” will be offered until Jan. 12.
Last week, the retailer trimmed its full-year earnings forecast and reduced 2009 store growth plans after reporting a 56.9 percent drop in third-quarter net income.
Tiffany lowered full-year guidance to $2.30 to $2.50 a share, from $2.82 to $2.92, with sales expected to be flat to down 2 percent. The charges from the retirement incentive were not included in the full-year forecast, the firm said.
Store growth for 2009 will be cut to five stores in the Americas, down from six this year. The retailer said it would open three stores in the U.S., one in Canada and one in Latin America. The jeweler plans to open eight stores across Asia-Pacific and Europe, down from 16 stores this year. The majority of the openings will be in the Asia-Pacific region, the company said.