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Tiffany & Co (NYSE:TIF) Q1 2019 Earnings Conference Call June 4, 2019 8:30 AM ET
Mark Aaron - VP, IR
Alessandro Bogliolo - CEO & Director
Mark Erceg - EVP & CFO
Jason Wong - Vice President and Treasurer
- Mark Aaron - IR副总裁
- Alessandro Bogliolo - 首席执行官兼董事
- Mark Erceg - 执行副总裁兼首席财务官
- Jason Wong - 副总裁兼财务主管
Tracy Kogan - Citigroup
Lorraine Hutchinson - Bank of America Merrill Lynch
Robert Drbul - Guggenheim Securities
Erwan Rambourg - HSBC
Laurent Vasilescu - Macquarie Research
Dana Telsey - Telsey Advisory Group
Michael Binetti - Crédit Suisse
David Bellinger - Oppenheimer & Co.
Janet Kloppenburg - JJK Research Associates
Matthew Boss - JPMorgan Chase & Co.
Oliver Chen - Cowen and Company
Edward Yruma - KeyBanc Capital Markets
Alexandra Walvis - Goldman Sachs Group
Omar Saad - Evercore ISI
- Tracy Kogan - 花旗集团
- Lorraine Hutchinson - 美国银行美林证券
- Robert Drbul - 古根海姆证券
- Erwan Rambourg - 汇丰银行
- Laurent Vasilescu - 麦格理研究
- 达纳特尔西 - 特尔西咨询集团
- Michael Binetti - CréditSuisse
- 大卫贝林格 - 奥本海默公司
- Janet Kloppenburg - JJK Research Associates
- Matthew Boss - 摩根大通公司
- Oliver Chen - Cowen and Company
- Edward Yruma - KeyBanc Capital Markets
- 亚历山德拉沃尔维斯 - 高盛集团
- Omar Saad - Evercore ISI
Good day, everyone, and welcome to this Tiffany & Co. First Quarter 2019 Conference Call. Today's call is being recorded. Participating on today's call is: Mr. Mark Aaron, Vice President of Investor Relations; Mr. Alessandro Bogliolo, Tiffany's Chief Executive Officer; Mr. Mark Erceg, Tiffany's Executive Vice President and Chief Financial Officer; and Mr. Jason Wong, Vice President and Treasurer.
And at this time, I would like to turn the conference over to Mr. Mark Aaron. Please go ahead.
大家好，欢迎参加蒂芙尼公司2019年第一季电话会议。 今天的电话正在录音。 参加今天的电话会议的有：投资者关系副总裁Mark Aaron先生
Thank you, everyone, for joining us on today's call. We issued Tiffany's first quarter results earlier today with a news release and with the filing of our quarterly report on Form 10-Q. I hope you've had a chance to look at the financial results, which were close to what we expected. Following comments from Alessandro and Mark, we will be pleased to take your questions. And then following the Q&A session, Jason and I will wrap up the call with some closing remarks.
Before continuing, please note that statements made on this call that are not historical facts are forward-looking statements. Actual results might differ materially from the planned, assumed or expected results expressed in or implied by these forward-looking statements. The company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by applicable law or regulation.
Additional information concerning factors, risks and uncertainties that could cause actual results to differ materially as well as the required reconciliations of the non-GAAP measures referenced in this presentation to their comparable GAAP measures is set forth in Tiffany's Form 10-Q filed earlier today with the Securities and Exchange Commission as well as the news release filed today under cover of Form 8-K. Those filings can be found on Tiffany's investor website, https://investor.tiffany.com by selecting Financials.
I'll now turn the call over to Alessandro.
Thanks, Mark, and hello, everyone. There are many positive and exciting initiatives taking place at Tiffany that should further our ability to generate healthy long-term growth. And I'm pleased to have this opportunity to provide you a brief update. I will first state the obvious. Tiffany's results in recent quarters have not been up to the long-term growth standards we have set for ourselves. Regional results in the first quarter were slightly softer than what we expected. Worldwide sales declined 3% following a strong 15% increase in last year's first quarter. However, worldwide sales on a constant exchange rate basis were equal to the prior year with sales growth in Asia-Pacific and Europe on the same basis, offset by a decline in the Americas and then changed the results in Japan.
We believe that external pressures had a significant impact on sales. For example, we believe that the strong dollar had a meaningful impact on first quarter retail sales attributed to foreign tourists in the Americas. Our internal estimates indicate that those tourist sales represents a low double-digit percentage of our American retail sales. Those sales were down approximately 25% from a year ago with sharper declines among Chinese tourists, which in fact were even more pronounced than declines in the second half of last year.
However, our internal estimates also indicate that constant currency retail sales to local customers, which we believe are much more -- much better indicator of underlying brand strength and our future growth potential, were up by approximately 3% from a global basis during the first quarter with strong growth in mainland China being particularly noteworthy. This is why we remain focused on the strategic priorities which are within our control and then identified and are aggressively pursuing numerous ways we can enhance the excitement and relevance of this amazing brand. We strongly believe that effectively executing our strategic priorities, first and foremost, will be what takes this company to new heights of success.
Let me give you a few examples. Our strategy to renew our product offerings continues to gain momentum. After successfully launching the platinum- and diamond-based PAPER FLOWERS collection last year, we are continuing to add new designs to this collection. Another major collection we recently introduced is the TIFFANY TRUE collection, featuring an innovative modern engagement ring design with a new diamond cut in a gold or platinum setting as well as with accompanying band rings.
Finally, on a smaller scale, we have recently introduced Tiffany Love Bugs that complements our Return to Tiffany collection. Importantly, we have also included a gold version of Return to Tiffany Love Bugs in addition to silver, which is consistent with our strategy to continue driving higher-than-average transaction value across all of our product categories. And I can tell you that we have a substantial amount of newness planned for the second half of the year with additions to the Tiffany T and HardWear collections among others. And I'm also pleased that we now have even greater visibility into our product innovation pipeline for the next several years. And I'm excited about what is being developed.
然而，我们的内部估计也表明，对于本地客户的恒定货币零售销售，我们认为这是更好的 - 更好的基础品牌实力指标和我们未来的增长潜力，在全球范围内首次上涨约3％中国大陆强劲增长的季度特别值得注意。这就是为什么我们仍然专注于我们掌控的战略优先事项，然后确定并积极寻求多种方式来增强这个惊人品牌的兴奋和相关性。我们坚信，有效地执行我们的战略重点，首先是将公司带到成功的新高度。
我举几个例子。我们更新产品的战略继续获得动力。在去年成功推出基于铂金和钻石的PAPER FLOWERS系列后，我们将继续为此系列添加新设计。我们最近推出的另一个主要系列是TIFFANY TRUE系列，采用创新的现代订婚戒指设计，金色或铂金镶嵌的新钻石切割以及附带的戒指。
最后，在较小的规模上，我们最近推出了Tiffany Love Bugs，它补充了我们的Return to Tiffany系列。重要的是，除了白银之外，我们还包括黄金版的Return to Tiffany Love Bugs，这与我们继续在所有产品类别中推动高于平均交易价值的策略一致。而且我可以告诉你，我们计划在今年下半年增加大量的新功能，并增加Tiffany T和HardWear等系列产品。我也很高兴我们现在能够更好地了解未来几年的产品创新渠道。我对正在开发的内容感到兴奋。
We are also steadily progressing with our strategy to amply and evolve brand message. Focused on our most iconic collections and especially Tiffany T., the current campaign showcases beautiful Tiffany jewels worn by a cast of some of the most recognizable and richly diverse fashion models in the world. The brand's unique joyful attitude and iconic blue color made the campaign unexpectedly Tiffany. Importantly, the campaign is truly a digital-first campaign with most of the investment and assets directly -- directed towards social and other digital media.
I should also highlight the publicity we have received and substantial impressions that were made in social media after Lady Gaga appeared at the Academy Awards in late February wearing the legendary 128-carat Tiffany Diamond. And we are making substantial progress to enhance our in-store presentations. We launched our global display enhancement initiative last year to add fresh and innovative elements of visual merchandising for our stores in North America. And we are now on track to complete the rollout of that initiative to all stores globally by this fall.
We have also added some new stores in the first quarter. We opened our first store in Washington, D.C. in the new CityCenterDC luxury complex. We also completed the relocation of our most important store in Australia, where we opened a magnificent new store at the corner of Pitt and King Streets in Sydney. We are continuing our exciting development in mainland China this year. And total sales continued to grow by a double-digit rate in local currency in the first quarter. Our recent initiatives included relocating our store in Beijing's China World to an exceptional location with a redesigned 6,000-square foot format, showcasing an innovative and distinctive retail experience that encourages interaction and self-expression.
Also we opened a concept store in Japan on Tokyo's Cat Street. Located in Harajuku, the experiential design for Tiffany at Cat Street showcases the wit, creativity and timelessness of the brand. From jewelry to home and accessories, the store offers a thematically curated selection and presentation of iconic designs and even houses a café at the top floor. In terms of our projects to transform the New York flagship store into 21st century experience, construction has begun on the adjacent space with an anticipated completion of that temporary space by year-end. Once completed, we will shift most of our retailing space to that adjacent location for 2020 and 2021.
Complementing the store base, we relaunched all of our global websites in the first quarter which, going forward, will allow us to offer a blended experience of content and commerce with enhancements that we expect will enable us to more effectively test, personalize and optimize content and ultimately ensure a better customer experience in the long term. In addition, for the first time, customers in the U.S. can now order online from a select assortment of band engagement rings.
此外，我们在日本东京猫街开设了一家概念店。位于原宿的Tiffany at Cat Street的体验式设计展示了品牌的智慧，创造力和永恒。从珠宝到家居和配饰，商店提供主题精选的标志性设计选择和展示，甚至在顶层设有咖啡厅。就我们将纽约旗舰店转变为21世纪经验的项目而言，相邻空间的建设已经开始，预计到年底将完成该临时空间。完成后，我们将把大部分零售空间转移到2020年和2021年的相邻位置。
While we are understandably excited about these new capabilities, we did make the conscious decision to suspend digital marketing for a portion of the first quarter to ensure that our newly revamped websites could handle the load balances associated with a complete digital replatforming. And we believe that decision, while prudent, negatively impacted first quarter sales, although e-commerce sales still grew faster than total company sales. It is probably also worth a second to mention that we are getting closer to introducing an e-commerce-enabled website in China, which we believe will further strengthen our business in this important market.
So in closing, we are pursuing a substantial number of initiatives to benefit our customers and drive sales and earnings growth as we move forward on this long journey. We certainly do not believe that first quarter results are indicative of our longer-term earnings power and recent external pressures will not sway us from the growth opportunities available to us.
And now Mark Erceg has a few comments before we open up the call to all the questions.
Thanks, Alex. As Alex indicated, first quarter reported sales results were slightly lower than anticipated but broadly in keeping with our overall guidance for the year, which called for a soft first half due to a very strong base period, lower foreign tourist spending and meaningful FX headwind followed by stronger second half results as year-over-year comparisons get easier, foreign exchange pressures lessen and the bulk of our 2019 new product launches and associated marketing support reaches the market.
Since we expected first quarter sales to be under pressure, and we knew that the incremental strategic investment spending, which began during the second quarter of 2018, needed to be fully annualized, we correctly anticipated downward earnings pressure in the first quarter, which is consistent with the results we just released. Gross margin was below last year, which reflected negative sales leverage on fixed costs that are included in cost of sales as well as shifts in sales mix, including an increase in higher price point jewelry that earns a lower gross margin and an increase in wholesale sales of diamonds that earn as little if any gross margin, partially offset by lower product-related costs.
SG&A expense growth was restrained in the quarter through tight expense management, including cost savings from our global procurement program, labor cost reductions through organizational efficiencies and, of course, variable cost savings tied directly to sales. Our effective tax rate for the quarter was lower than anticipated due primarily to an increase in estimated 2018 Foreign Derived Intangible Income benefit we realized as a result of recently issued U.S. Treasury guidance. That said, we continue to believe that our all-in effective tax rate for the full year will be in the low 20s.
Net inventories as of April 30 were 6% above the prior year as we continue to work off higher-than-expected postholiday levels. But importantly, we continue to expect minimal year-over-year growth by year-end. Our balance sheet remains strong, having finished the quarter with $763 million of cash, cash equivalents and short-term investments compared with just over $1 billion of total short-term and long-term debt. This enables us to reinvest in the growth of our business while also returning cash to shareholders. For example, we are spending more on capital expenditures for the next couple of years to support the transformation of our New York flagship store while we also continue to invest in the modernization of our IT infrastructure.
At the same time that we're investing in the future of our business, we are returning cash to shareholders as evidenced by $25 million we spent during the quarter to repurchase approximately 270,000 shares of common stock. In addition, our Board of Directors has approved a 5% increase in the quarterly dividend rate, which is consistent with our stated objective to move over time our dividend payout ratio closer to 50%. This will be the 18th dividend increase in the past 17 years.
Operationally, we are pleased with the progress being made with our IT system upgrades. Since our last earnings release, we have upgraded our e-commerce digital platforms and activated a new advanced supply chain planning system, which should enable more sophisticated load management and production scheduling across our suppliers and our vertically integrated manufacturing network.
So all in all, we just reported an admittedly soft but mostly anticipated and overall productive start to 2019, during which a number of strategic initiatives continued to advance. From a guidance standpoint and relative to the top line, we are being impacted by further declines in foreign tourist spending, where we continue to look for low single-digit sales growth for the year. Relative to the bottom line, we implemented some modest pricing actions towards the end of the first quarter and have plans for strict cost control management throughout the balance of the year. But we are being affected by the softness in foreign tourist spending and, to a lesser extent, the recent imposition of higher tariff rates on jewelry products that we export from the U.S. into China and our decision to not meaningfully increase our retail prices in China at the present time.
Since we are determined to properly support and protect our business in mainland China against our principal competitors, we do not have to contend with higher import costs into China based on their unique sourcing locations. And after taking everything else we have discussed today into account, we think it is prudent to modestly widen our earnings per share guidance range from mid-single-digit growth to low to mid-single-digit growth. And of course, as we mentioned on our last call, we should not lose sight of the fact that EPS growth in 2019 is expected to be affected by incremental expenses tied to the New York flagship store renovations, which we estimate at $0.10 to $0.15 per share in 2019 versus $0.07 per share last year as well as a change in accounting standards that no longer allows us to recognize approximately $8 million per year of deferred gains on previous sale-leasebacks.
So with that, I'll turn the call back to Mark.
Thanks, Alessandro and Mark. [Operator Instructions]. Operator, we are now ready to take the first question.
谢谢，亚历山德罗和马克。 [操作员说明]。 接线员，我们现在准备好接受第一个问题。
[Operator Instructions]. We will now take our first question from Paul Lejuez from Citigroup.
[操作员说明]。 我们现在将从花旗集团的Paul Lejuez那里得到第一个问题。
It's Tracy Kogan filling in for Paul, had a couple of questions. I was hoping you could talk about your performance on some of the higher traffic periods, like Valentine's Day and Mother's Day, so around those periods. And also if you can give us a little bit more detail on your local market performance by region.
这是Tracy Kogan为保罗填写的，有几个问题。 我希望你能谈谈你在一些较高流量时期的表现，比如情人节和母亲节，所以在这些时期。 此外，如果您能按地区向我们提供有关当地市场表现的详细信息。
Thank you, Tracy, for your question. Well, the first quarter -- well, of course, it's not the biggest quarter in seasonality for our business. Of course, there was Valentine's Day and Mother's Day. But I would -- and there is nothing really particularly noteworthy on this. I think the comments refer more to the entire quarter, where our business with local customers on a global basis was positive. In constant currencies, we grew by 3% and [indiscernible] this growth spread around the different geographies, led, first and foremost, by China.
谢谢你，特蕾西，你的问题。 那么，第一季度 - 当然，这不是我们业务季节性最大的季度。 当然，有情人节和母亲节。 但我会 - 而且没有什么特别值得注意的。 我认为这些评论更多地涉及整个季度，我们在全球范围内与当地客户的业务是积极的。 在不变货币中，我们增长了3％，[音频不清晰]这种增长在不同的地区传播，首先由中国引领。
Great. And then how about the local customers in the U.S.? Any comment there? Did it get better versus fourth quarter? Or did it decelerate?
非常好。 那么美国的本地客户呢？ 有评论吗？ 与第四季度相比，它变得更好吗？ 还是减速了？
In the U.S., the performance of local customers has been positive. But we have seen some degree of caution in the U.S. customer.
We will now take our next question from Lorraine Hutchinson from Bank of America.
I wanted to follow up on the second half sales opportunities. It sounds like the Chinese consumer spending has actually gotten worse in the first quarter, so maybe you could see some continued weakness as you continue to lap that through the year. What are your -- any specific product launches, marketing changes, store updates? Maybe just help us gain some confidence in that back half sales acceleration that you're expecting.
我想跟进下半年的销售机会。 听起来中国消费者支出在第一季度实际上已经变得更糟，所以也许你可能会看到一些持续的疲软，因为你继续在这一年中持续下滑。 你有什么 - 任何具体的产品发布，营销变化，商店更新？ 也许只是帮助我们对你所期望的后半部分销售加速度有所信心。
Thank you, Lorraine. We have a very busy second [Technical Difficulty] in terms of many initiatives, first of all, in terms of new products. Then I would say marketing campaigns, enhancements in stores' visual merchandising. We have, as you mentioned, a year-over-year comparison that becomes easier, more favorable to us. And we bank on the assumption that Chinese tourist spending will level off after the sharp decrease we registered starting from the third quarter of last year. And so we have a lot of initiatives in different areas. It goes from important store relocations and openings for the second part of the year as well as a on difficult -- on a different point, the launch, after the very successful signature fragrance that we launched a couple of years ago, the launch of a new pillar fragrance in the second part of the year in the fall. So let me say, the agenda is a very busy, but teams are working very hard on all the different areas. And this is why we feel confident for a stronger performance in the second part of the year.
谢谢你，洛林。就新产品而言，我们在许多计划方面都有非常繁忙的第二次[技术难度]。然后我会说营销活动，商店视觉营销的增强。正如您所提到的，我们的年度比较变得更容易，对我们更有利。我们假设中国旅游消费将在去年第三季度开始大幅减少之后趋于平稳。因此，我们在不同领域有很多举措。它来自于重要的商店搬迁和开业的第二部分，以及一个难点 - 在另一个点，发布，在我们几年前推出的非常成功的签名香水，推出一个在秋季的第二部分新的支柱香水。所以，让我说，议程非常繁忙，但团队正在努力处理所有不同的领域。这就是为什么我们对今年下半年更强劲的表现充满信心的原因。
We will now take our next question from Bob Drbul from Guggenheim Securities.
And Mark, I'm not sure if this is your last call with us, but thanks for everything. I don't know if you're doing the one in August. The first question I have is around the engagement category. Can you just talk about trends in engagement and sort of how you see that as a sort of underlying business metric? And then the second question that I have is can you just talk about your ability to sort of gain new customers, bring new customers in with a lot of the marketing that you're doing?
而马克，我不确定这是否是你与我们的最后一次通话，但感谢你的一切。 我不知道你是否在8月份做这个。 我的第一个问题是参与类别。 您能谈谈参与趋势，并将您看作是一种潜在的商业指标吗？ 然后我的第二个问题是你能谈谈你获得新客户的能力，带来新客户进行大量的营销活动吗？
Thank you, Bob. I will start from the second question. That is about new customer and existing customers because I think it's a very relevant point. What we have seen in local customers is a growth of overall 3% at constant exchange rate. Now this growth has been driven both by existing customers as well as new customers. And it's very relevant to share with you is that we have just completed the regular annual health -- brand health survey that we do in the key markets. And so we are now able to compare our brand, how it is perceived now compared to when it was -- when the last survey that was more than 1 year ago, so before the new marketing campaigns that we launched last year.
And I'm pleased of the results because we have seen, for example, in the U.S., an increase in relevance for -- and distinctiveness of our brand among the consumers, especially sophisticated consumers. And we have recorded a very strong increase in brand power in China for the Tiffany brand. So I'm feeling very confident about the step we have taken in the last 12 months in terms of new communication because at least in these 2 key markets, we're showing that it has strengthened the brand and gives, I think, answer to your question about both existing customers and new customers, we are seeing progress in both of them.
鲍勃，谢谢你。我将从第二个问题开始。这是关于新客户和现有客户，因为我认为这是一个非常重要的观点。我们在当地客户看到的是按固定汇率计算，总体增长率为3％。现在，这种增长既受到现有客户也受到新客户的推动。与您分享非常重要的是，我们刚刚完成了我们在主要市场进行的定期年度健康品牌健康调查。因此，我们现在能够比较我们的品牌，现在的感受与现在相比 - 在上一次调查超过一年前，所以在我们去年推出的新营销活动之前。
Bob, thanks for your kind words.
Our next question comes from Erwan Rambourg from HSBC.
I wanted to take this opportunity also to tell Mark thanks for all the help and insights over the years, and welcome to Jason. I wanted to focus on the U.S. and wanted to get a sense of the American consumers. What percentage of the U.S. is local in nature? And would you attribute the 4% comp decline mostly to tourist inflows or maybe there's an impact of equity markets as well on the Q1? And then maybe just related to the U.S., my understanding is the former Niketown location that you're refurbishing, that will be open for the holiday. Will the main location also be open at that stage?
我想借此机会告诉Mark多年来的所有帮助和见解，欢迎来到Jason。 我想专注于美国，并希望了解美国消费者。 美国本土的百分比是多少？ 您是否认为4％的比率下降主要归因于旅游流入，或者也许会对第一季度股市产生影响？ 然后可能只是与美国有关，我的理解是您正在翻新的前Niketown位置，这将是假期开放。 主要位置也会在那个阶段开放吗？
Okay. So there's a little -- thank you, Erwan. There are several questions altogether. Let me answer first to the last one. That is easier for holiday, not only the ground floor but the entire flagship -- current flagship building will be open. And now let's go to the other questions that are more articulated. So first of all, it's about the tourists in the U.S. The tourists in the U.S. represent a low double-digit percentage of our total sales in the U.S. And we have you seen a sharper decrease to sales to tourists in the U.S. in the range of 25%, even sharper for Chinese tourists. And this is in line -- it's not even a little bit stronger trend than we have seen in the past couple of quarters. Now this is -- of course, it has a negative impact on the comp sales in the U.S. because double-digit percentage of sales depends on tourists. And so of course, this affects the overall. And as I said, the local -- the domestic customers were positive but with, I would say, quite cautious. What is important for me is that the relevance of the brand with Chinese customers that keeps on being confirmed by the strong performance in China.
好的。所以有一点 - 谢谢你，Erwan。总共有几个问题。让我先回答最后一个问题。这对于度假来说更容易，不仅仅是一楼，而是整个旗舰店 - 目前的旗舰大楼将会开放。现在让我们回到其他更明确的问题。首先，它是关于美国的游客。美国的游客占我们在美国总销售额的两位数百分比。我们看到美国游客的销售额下降幅度更大。 25％，中国游客更加敏锐。这是符合要求的 - 它甚至没有我们在过去几个季度看到的更强烈的趋势。现在这是 - 当然，它对美国的销售额产生了负面影响，因为销售额的两位数百分比取决于游客。当然，这会影响整体。正如我所说，当地 - 国内客户是积极的，但我会说，非常谨慎。对我来说重要的是，品牌与中国客户的相关性不断被中国的强劲表现所证实。
The one thing I would offer and add to that is we did see a little bit of a difference between what took place with respect to Chinese tourism in the U.S. relative to non-Chinese tourism in the U.S. We actually saw the Chinese tourism for U.S. retail fall off towards this latter part of the second quarter last year but principally into the third. The other tourism to the U.S. really started to denigrate in the fourth quarter and has continued since that time.
我要提出的一点是，我们确实看到美国中国旅游业与美国非中国旅游业之间的差异有点差异我们实际上看到中国旅游业对美国零售业的影响。 去年第二季度的后半部分，但主要是进入第三季度。 美国的另一个旅游业在第四季度真正开始贬值，并且从那时起一直持续下去。
And to Erwan's question about whether the declining stock market might had some effect on consumer psychology?
Yes. Well, referring specifically to the U.S. customer, I think that this caution is [indiscernible] to several factors. First of all, we have seen all the confidence index of the consumers in the U.S. that is in this first quarter of the year is pretty low compared to exactly 1 year ago when it was extremely high. We have seen also brands in the -- big brands in the cosmetic industry, in the fashion industry, if you look also department stores in the U.S. reporting soft sales in the first quarter. And they are all brands that have a big presence in the entire country of United States. So it's positive, but it's very cautious.
是。 那么，具体指美国客户，我认为这种谨慎对于几个因素是[音频不清晰]。 首先，我们已经看到美国消费者在今年第一季度的所有信心指数都与1年前非常高的情况相比非常低。 我们还看到了化妆品行业，时尚行业的大品牌，如果你看一下美国百货商店在第一季度报告的软销售情况。 他们都是在美国整个国家都占有重要地位的品牌。 所以这是积极的，但它非常谨慎。
Our next question comes from Laurent Vasilescu from Macquarie.
Thank you very much for all the commentary on the U.S. tourism decline of 25%. Mark, could you -- can you tell us a little bit about what you're contemplating for U.S. tourism decline for the overall top line guide for this year? And then any commentary on the shape of the gross margin curve for the year as it progresses would be very helpful.
非常感谢所有关于美国旅游业下降25％的评论。 马克，你能否 - 你能告诉我们一些关于你今年整体顶线指南的美国旅游业下滑的看法吗？ 然后，对年度毛利率曲线形状的任何评论都会非常有帮助。
Thank you. I'd tell you, the tourism one is hard for us to be overly predictive of. But we are trend-takers, so to speak. Just like we take spot FX and presume that what holds through balance of the year, we're kind of doing the same thing here with the tourism. We're not assuming things get any better, but we're also not necessarily assuming things get any worse, just that the trends that we had seen continue on. Now realistically and practically, we are hoping that once we get to the third quarter, the rate of reduction that we've seen in Chinese tourism, we're hoping that, that moderates because frankly with such a swift decline, it would be kind of hard to believe that year-over-year, we could see a continuing step-down of that magnitude. But at this point, we're not being overly optimistic. We don't have our second half plans predicated upon tourism suddenly coming back to us, which is something we can't control.
As for the gross margin, when you think about what happened in the first quarter, there was really three factors. One was the wholesale sale of diamonds, which we really can't be overly predictive of. We get the rough boxes in, sometimes we get to reprocess those and push them back out though not Tiffany quality. We also saw some negative sales leverage on fixed costs. I would expect that to continue for another quarter or so. But certainly by the second half of the year when we're ramping back up for our second half product launches and things, we expect our factory loads to be much more balanced. So that should be kind of a temporary phenomenon. And then as far as the mix is concerned, we talked about was the fact that we sold a lot of additional higher price point items in the first quarter. And that's really at the end of the day probably a good thing for us. So as we think about the full year on a margin basis, we knew the first half would be tough. We expect to make up ground in the second half. And so when the dust settles out on the full year based on the guidance we've given, we would expect operating margin to be flat to maybe slightly up as we sit here today.
Our next question comes from Dana Telsey from Telsey Advisory Group.
我们的下一个问题来自Telsey Advisory Group的Dana Telsey。
And Mark, best of luck, what a pleasure over all the years. As you think about the guidance for the year and just the cadence of the guidance, SG&A and also as you just commented on gross margin, new product introductions, when should we see them? And how do you think about expense management during the year, given the investments that are being made?
马克，祝你好运，多年来一直很愉快。 当您考虑今年的指导和指导的节奏时，SG＆A以及您刚刚评论毛利率，新产品介绍时，我们应该何时看到它们？ 考虑到正在进行的投资，您如何考虑年内的费用管理？
I'll let Alex comment on the new initiatives, which we're very excited about. But as far as expense management, I hope you did see as you look through the first quarter results that the SG&A growth really was restrained. And that's a testament to the fact in the hard work that the entire organization is doing to make sure that we are really only spending money on things that can drive sales growth at the end of the day. I would expect that to continue throughout the year as our procurement programs and other initiatives that we've discussed in the past continue to take hold. But there will be very tight reins on cost so that we can fuel additional investments in growing the business.
我会让Alex评论我们非常兴奋的新举措。 但就费用管理而言，我希望你确实看到第一季度结果显示SG＆A增长确实受到限制。 这证明了整个组织正在努力确保我们真的只花钱购买能够在一天结束时促进销售增长的事情。 由于我们过去讨论过的采购计划和其他举措继续占据主导地位，我希望全年能继续这样做。 但是，成本将会非常紧张，因此我们可以为发展业务增加额外投资。
Yes. And in terms of plans for the second part of the year, we will keep on pursuing the strategy that we have started last year. And they're, first and foremost, to products, which is the most important things we have. Because what we have been doing has been to launch, starting from PAPER FLOWERS in platinum, then Tiffany T True in platinum and gold and the jewelry in gold. We will continue with this approach of introducing newness, mainly in gold, at a very accelerated pace. And so far, even if it is only 1 year, we are seeing that in our results, the growth in revenues comes from the newness and especially from the newness in gold. And the higher the price, the higher the performance.
So this, we find it very reassuring for the strategy we have taken and also reinforcing the brand and clearing, if anybody has a doubt that Tiffany is a luxury brand, clearing definitely this out because we are seeing increasing average transaction value and strong performance in the gold and more precious categories. We believe this is positive for the brand in the short term and the long term. And the launches that we have foreseen for the second part of the year continue in the same strategy.
是。就今年第二部分的计划而言，我们将继续推行我们去年开始实施的战略。它们首先是产品，这是我们拥有的最重要的产品。因为我们一直在做的是从铂金的PAPER FLOWERS开始，然后是铂金和黄金的Tiffany T True以及黄金的珠宝。我们将继续采用这种方式，以非常快的速度引入新的主要是黄金的新方法。到目前为止，即使仅仅1年，我们也看到，在我们的结果中，收入的增长来自新的，特别是来自黄金的新奇。价格越高，性能越高。
Our next question comes from Michael Binetti from Credit Suisse.
我们的下一个问题来自Credit Suisse的Michael Binetti。
And Mark, let me add my congrats and thank you for your help all over the years. I wanted to just -- so I just wanted to ask, on the SG&A, it looks -- I'm trying to think about the cadence of this year. And as you stepped it up last year in the second quarter, you talked about how you'll anniversary that this quarter. But I think you mentioned managing cost in both 4Q and now 1Q. So was any of that SG&A had to be pushed out to the second half of this year perhaps to support the comp acceleration that you're looking forward around the innovation pipeline? And then I guess as we think about trying to connect that to next year, Mark, maybe you could just remind us what are the components that are allowing you to lever SG&A on a low single-digit comp this year. And do those go back into the algorithm next year as we think out to 2020?
马克，请允许我加入祝贺，并感谢你多年来的帮助。 我只是想 - 所以我只是想问一下，在SG＆A上，看起来 - 我正在考虑今年的节奏。 当你去年在第二季度加强时，你谈到了本季度的周年纪念日。 但我认为你提到了第四季度和现在第一季度的成本管理。 那么SG＆A中的任何一个都必须被推到今年下半年，或许是为了支持你在创新渠道中期待的加速加速吗？ 然后我猜想当我们考虑将它连接到明年时，马克，也许你可以提醒我们有哪些组件可以让你在今年的低单位数比赛中获得SG＆A。 当我们想到2020年时，那些会重新进入算法吗？
Yes. Thank you for the question. So with respect to the first portion of what you asked, when you think about when we really started stepping up our investment spending profile, last year, it was principally in the second quarter. So we said that we needed to really lap and annualize that. [Indiscernible] were there any costs or charges or investments in the first quarter of this year that maybe slipped a little bit toward the second quarter or third quarter? And Alex commented in our prepared remarks about [indiscernible] digital marketing elements as we stood up our 13 global e-commerce-enabled sites. So that arguably was a little bit of a push. From this point forward, I would say the run rate you're going to see as far as investment spending, marketing support, in-store [indiscernible], I think it will be fairly steady and constant from Q2 through the balance of the year. And then from that point, we already elevated and stepped up the amount of spending we think is appropriate in order to sustainably grow the business. So I think at this point, most of that is now behind us, which is important. As far as the cost takeout efforts are concerned, however, I think I would tell you that we felt [indiscernible] with respect to that.
The global procurement group has been around for a number of years. They continue to do really good work. We're standing up a source-to-pay system as we speak, which will give them visibility into all of our global spend pools, which is something they haven't had up to this point in time. We're doing a lot of work with our suppliers and our supplier enablement and putting supplier scorecards in place, doing a lot more diligent tracking as it relates to that. The jewelry design and innovation workshop we talked about before has been a great intervention, where we bring the [indiscernible] and the design group and the engineering group together to let us do [indiscernible] costing, [indiscernible], allows us to do [indiscernible] modeling. I mentioned in the prepared remarks about the advanced planning system we just stood up on the manufacturing side of the house. This was a multimillion-dollar project that spanned well over a year and took a lot of multifunctional participation. But it's going to allow us to optimize our inventory levels. It's going to allow us to make better make-versus-buy decisions. It will enable much more sophisticated capacity planning. I mean frankly, we've been managing our production loads on Excel spreadsheets up to this point in time across our factory network. So to be able to do mass rescheduling across our facilities and vendors, detail the production scheduling for each manufacturer, those types of things are big enablers for us. So I could go on. But I think that should give you some sense of the things that we're working against.
We will now take our next question from Brian Nagel from Oppenheimer.
It's David Bellinger on for Brian. First of all, thanks for everything, Mark. Appreciate all your help over the years. I just wanted to follow up on the weaker sales to the foreign tourists, so estimated down 25% from last year's Q1 levels. Can you tell us how much lower that figure is versus what we saw in the later stages of 2018? And can you speak to how the trend tracked around Q1? Are there any indications your -- of stabilization you're seeing there throughout the business?
这是David Bellinger对Brian的看法。 首先，谢谢你的一切，马克。 多年来感谢您的所有帮助。 我只是想跟进外国游客的销售疲软，因此估计比去年第一季度下降了25％。 你能告诉我们这个数字与我们在2018年后期看到的相比有多少？ 您能否谈谈第一季度的趋势如何？ 您是否有任何迹象表明您在整个企业中看到的稳定性？
I guess what we would say is the sharp decline we saw in Chinese tourists of U.S. retail really presented itself for the first time in June of last year. And we have been running down significantly since that point in time. That said, the reduction that we saw in the first quarter was even more extreme than what we experienced in the third quarter of the last year as well as the fourth quarter of last year. So the good news there, if there is any, is the fact we're trying to come up upon when we should at least start lapping that in the base period.
As far as the other tourism is concerned, again I mentioned that, that's going to fall off in the fourth quarter. And that has continued as well. Within the quarter itself, I'm really hesitant to say anything about month-to-month because again this is internal data. This is some work that we do. From an estimation standpoint, there's not a third party to fully validate all of this. It's our internal sourcing. So we believe it's good, accurate. But I wouldn't want to read much month-to-month. I think the quarter-to-quarter trends are probably more relevant.
Yes. Sort of because consumer [indiscernible] from one market to one another. It's not actually part of our business. But these are trends that can be read on a 3-, 6-, 12-month basis. So I mean [indiscernible], I mean I don't think it's really relevant on a monthly basis.
是。 因为消费者[音频不清晰]从一个市场到另一个市场。 它实际上并不是我们业务的一部分。 但这些趋势可以在3个月，6个月，12个月的基础上阅读。 所以我的意思是[音频不清晰]，我的意思是我不认为它每月都是真的相关。
Our next question comes from Janet Kloppenburg from JJK Research.
我们的下一个问题来自JJK Research的Janet Kloppenburg。
And thank you so much to Mark. I'm really going to miss you. You changed the standards for investor relations and we're all benefiting from that. Lots of luck, Mark. I had a couple of questions on the breakdown of the Engagement and Fashion Jewelry business. I think there was some deceleration in those categories in the fourth quarter. And I wondered about their performance here in the first quarter. And Mark, if you could just help us on SG&A. It sounds like there was a cutback in the marketing expense for the first quarter relating to e-com. How should we be thinking about the rate of increase of SG&A in the second quarter?
非常感谢Mark。 我真的会想念你。 你改变了投资者关系的标准，我们都从中受益。 很多运气，马克。 关于订婚和时尚珠宝业务的细分，我有几个问题。 我认为第四季度这些类别有所减缓。 我想知道他们在第一季度的表现。 马克，如果你可以帮我们SG＆A。 听起来第一季度与e-com相关的营销费用有所减少。 我们应该如何考虑第二季度SG＆A的增长率？
Thank you, Janet. So I will answer to your first question about the product categories. So in Jewelry Collections, we had a plus 1 -- reported plus 4% exchange rate exchange -- constant exchange rate basis performance. Now Jewelry Collections, as I said before, we have seen a strong performance in our newest, most iconic and most precious lines. Of course, the 4% is made of this strong growth and also negative on silver, less expensive items and, of course, products that were older in our assortment. But I'm -- while the 4% may seem just a low single digit, actually for me strategically, it's very important that is the average of some very strong growth in the lines in which we have invested for, for the future. So for me, that is strategically very important.
The 2% negative in Engagement Jewelry, actually it's a little bit -- it's a flattish kind of situation. We have to also remember that we are comparing to last year when we grew at constant exchange rate 11% and engagement plus 11%, that was astonishing last year. So I see it as performance. We have benefited of the launch of T True. But consider that T True engagement ring is now, for the time being, rolled out in the markets in the higher carats and not yet in smaller carats. So the reception by the market has been very positive. And the product is in line with our expectations, but it's not yet in its full potential.
谢谢，珍妮特。所以我将回答您关于产品类别的第一个问题。所以在珠宝收藏中，我们有一个加1 - 报告加4％的汇率兑换 - 恒定的汇率基础表现。就像我之前所说的，现在珠宝系列，我们已经看到了我们最新，最具代表性和最珍贵的线条的强劲表现。当然，4％是由于这种强劲的增长而且对白银，较便宜的产品也是负面的，当然还有我们种类较老的产品。但是我 - 虽然4％可能看起来只是一个很低的单位数，但实际上对我来说，战略上非常重要的是，我们为未来投资的线路中的一些非常强劲的增长的平均值。所以对我来说，这在战略上非常重要。
订婚珠宝的2％负面，实际上它有点 - 这是一种平淡的情况。我们还必须记住，我们与去年相比，当时我们以11％的恒定汇率和11％的参与率增长，这在去年是令人惊讶的。所以我把它视为表现。我们受益于T True的推出。但考虑到T True订婚戒指现在暂时在较高克拉的市场推出，而不是小克拉。因此市场的接待非常积极。产品符合我们的预期，但尚未充分发挥其潜力。
And [indiscernible] to your question, maybe I can just [indiscernible] and answer it a little bit more broadly. [Indiscernible] asking about is just marketing progression. If you think about the guidance we provided both on the top line and on the bottom line, it would suggest or imply that op margin will be flat to maybe slightly accretive year-over-year. Within that, what I would tell you is we expect [indiscernible] marketing as well as SG&A expense, inclusive of marketing as a percentage of sales, be roughly flat year-over-year. So there's not really a divergence between those two lines within the overall flat to slightly above margin.
[听不清]你的问题，也许我可以[音频不清晰]并且更广泛地回答它。 [听不清]询问的只是营销进展。 如果你考虑我们在顶线和底线提供的指引，它会暗示或暗示操作保证金将持平至可能略有增加的同比增长。 其中，我要告诉你的是，我们期望[音频不清晰]营销以及SG＆A费用（包括营销占销售额的百分比）与去年同期大致持平。 因此，整体公寓内的这两条线之间并没有真正的差异，略高于保证金。
Our next question comes from Matthew Boss from JPMorgan.
So maybe higher level, and I know probably not easy to do, but if you exclude the impact from tourism, what's your view on consumer engagement with the brand maybe by region? Particularly what are you seeing from local customers here in the U.S. and the driver of the strengths that you mentioned in mainland China?
Thank you, Matt, for your question. So talking about local customers, we have seen actually a positive performance across geographies. The strongest one has been definitely the China -- mainland China customers. And I have to say that also in Europe, in spite of all the difficulties that, that continent has, we have seen pretty positive performance there, totally driven by domestic customers. And because also Europe, in France notably but also other markets, had been negatively affected for that tourist component. Now in terms of engagement, I'm looking mostly at the other factors. It is the engagement on social media. This is why I -- in my prepared remarks, I underscored how the initiative, for example, of the red carpet, Lady Gaga and also the new advertising campaign, where we are using very well-known models, like Carolyn Murphy, Mica Argañaraz, Kendall Jenner, et cetera.
What we are seeing is an enormous increase in engagement on social media for Tiffany by customers. Now this is far from being an assurance of increase of sales in the near future. But for sure, it's very reassuring when it comes to the connection and the relevance of the brand with local customers. So of course, as I said, I was expecting slightly better results than what we have achieved. But if I look at really the fundamentals that is performance with domestic customers is gold and higher-priced products and engagement on social media, I'm really reassured about the direction that we have taken in terms of strategy.
谢谢，马特，你的问题。因此，在谈到本地客户时，我们已经看到跨地域的实际情况。最强者一直是中国大陆的中国客户。我不得不说，在欧洲，尽管该大陆存在各种困难，但我们在那里看到了相当积极的表现，完全由国内客户推动。而且因为欧洲，特别是在法国以及其他市场，对该旅游部分也产生了负面影响。现在就参与而言，我主要关注其他因素。这是社交媒体的参与。这就是为什么我 - 在我准备好的评论中，我强调了红毯，Lady Gaga以及我们使用非常着名模特的新广告活动的举措，例如Carolyn Murphy，MicaArgañaraz ，Kendall Jenner，等等。
Great. And then just a follow-up to that, on the Chinese consumer as a whole, I guess if we put together the spending abroad as well as the domestic spending that you just mentioned, I guess what's your view on the overall Chinese consumer in total relative to previous quarters?
非常好。 然后就中国消费者整体来说，如果我们将国外消费和你刚刚提到的国内支出放在一起，我猜你对整体中国消费者的看法是什么？ 相对于前几个季度？
Well, it's a mix of a very strong performance, high in growth in mainland China and a sharper decrease in the rest. So what we are seeing is actually a shifting of the mix of sales of Chinese because a few quarters ago, our sales to Chinese customers were typically split 1/3 in mainland China, 2/3 in the rest of the world. Now the components in mainland China has increased to about 40% and sales to Chinese outside of mainland China, including Hong Kong, the U.S., et cetera, has gone down to 60%.
嗯，这是一个非常强劲的表现，中国大陆的高增长和其他人的急剧下降。 因此，我们所看到的实际上是中国销售组合的转变，因为几个季度前，我们对中国客户的销售额通常在中国大陆的比例为1/3，在世界其他地区为2/3。 现在，中国大陆的零部件已增加到约40％，而中国大陆以外的中国人（包括香港，美国等）的销售额已下降至60％。
Our next question comes from Oliver Chen from Cowen and Company.
我们的下一个问题来自Cowen and Company的Oliver Chen。
And best regards, Mark. Thanks for all your help, and welcome, Jason. Regarding the overall operating margin on a long-term basis, what are your thoughts on dissecting the opportunity? Just a lot of our analysis relative to competitors shows a lot of good opportunity for you to improve the margin. I guess from the angle of business mix, fixed cost leverage and comp points and also supply chain and within business mix, are you thinking like-for-like changes? Just would love color around buckets on that long-term opportunity.
Look, we talked about this a number of times. And we had initially stated that after making the big investment step-up last fiscal, we expected our operating margin to expand this year. We're still hopeful that, that could occur. But with the strong reduction in tourism, we're now effectively saying it could be flat, maybe slightly up. If you look past the current year and you try and get past all these temporal effects that are affecting the business, we still are confident and believe that we should be able to -- through our cost management efforts and through growing the top line in a more consistent fashion, extract margin gains of roughly 50 basis points per annum, and that would over time obviously move us to a much better place. So without getting overly specific in the limited amount of time we have available for this call, I would simply say that our long-term growth algorithm, we don't view it as having been changed by these temporal effects that we're seeing right now with the tourism in particular.
看，我们多次谈到过这个问题。我们最初表示，在上一财年实施大规模投资后，我们预计今年的经营利润率将会扩大。我们仍然希望，这可能会发生。但随着旅游业的大幅减少，我们现在有效地说它可能会持平，也许会略微上涨。如果您看一下当前年度，并尝试通过影响业务的所有这些时间效应，我们仍然有信心并相信我们应该能够 - 通过我们的成本管理工作并通过增加顶线更加一致的时尚，每年提取大约50个基点的保证金增长，并且这将随着时间的推移显然将我们带到一个更好的地方。因此，如果没有在我们可用于此次通话的有限时间内过于具体，我只想说我们的长期增长算法，我们不认为它已被我们看到的这些时间效应改变了现在特别是旅游业。
Our next question comes from Edward Yruma from KeyBanc Capital Markets.
我们的下一个问题来自KeyBanc Capital Markets的Edward Yruma。
Mark, thanks for all the help over the years. You've been incredibly helpful in understanding the story. I guess just two quick ones for me. First, I know it's early days, but any initial reads on diamonds on e-com? And then second, I know you said you had good results in mainland China. But any negative perception with Tiffany being an American brand? Are you seeing anything on social media that would indicate you could have a problem going forward?
马克，感谢多年来的所有帮助。 你对理解这个故事非常有帮助。 我想对我来说只有两个快速的。 首先，我知道这是早期的事情，但是在电子商务上对钻石进行了初步读取？ 第二，我知道你说你在中国大陆取得了不错的成绩。 但蒂芙尼是美国品牌的任何负面看法？ 您是否在社交媒体上看到任何表明您可能会遇到问题的内容？
Thank you, Ed, for your questions. The first one, diamonds in e-commerce, you're right, it's very early. But I have to say that the reason why we decided to offer diamond rings on our online website for the time being in the U.S. has been, first and foremost, in order to give information to our customers. Because we know out of research that the decision-making for a purchase of an engagement ring take several steps, typically 6, 7 interactions at least with Tiffany before completing the purchase. And we believe that the ability that now we -- a customer has to go on our website and understand what is the difference in terms of carat, color, clarity on the price is crucial and helps a lot the decision-making. But typically, it's an important purchase that is completed in the store. We have sold already some diamonds online. But that is not for me the measure of success. The measure of success is better information and better final sales in our stores. Now the second question...
感谢Ed，感谢您的提问。 第一个是电子商务中的钻石，你是对的，现在还很早。 但我必须说，为什么我们决定在我们的网站上暂时在美国提供钻戒，这首先是为了向我们的客户提供信息。 因为我们从研究中知道购买订婚戒指的决策需要几个步骤，通常在完成购买之前至少与蒂芙尼进行6次，7次互动。 我们相信，现在我们 - 客户必须访问我们的网站并了解克拉，颜色，价格清晰度方面的差异是至关重要的，这对于决策制定有很大帮助。 但通常情况下，这是在商店中完成的重要购买。 我们已经在线销售了一些钻石。 但这不是我成功的标准。 成功的标准是更好的信息和更好的商店最终销售。 现在第二个问题......
The negative perception of Tiffany in China, I have to say that we are not experiencing any negative sentiment by Chinese consumers towards the brand. For sure not in China, where sales are increasing very strongly, but also about -- even if we see a softness in sales to Chinese tourists, it's totally linked out of our recollection to exchange rates and also to the push that authorities in China are making in order to increase local consumption. Don't forget that the VIP has decreased in the period in China. And accordingly, we have also decreased our price because we have transferred this decrease in VIP to consumers. So absolutely, we are not experiencing any sentiment that is against our brand and definitely North America.
蒂芙尼对中国的负面看法，我不得不说中国消费者对这个品牌没有任何负面情绪。 在中国，销售额增长非常强劲，而且即使我们看到中国游客的销售疲软，也完全与我们对汇率的回忆以及中国当局的推动有关。 制作以增加当地消费。 不要忘记，在中国期间VIP已经减少。 因此，我们也降低了价格，因为我们已将VIP的减少转移给消费者。 所以绝对不会，我们没有任何反对我们品牌和北美的情绪。
Our next question comes from Alexandra Walvis from Goldman Sachs.
我们的下一个问题来自Goldman Sachs的Alexandra Walvis。
I'll add my thanks also to Mark for all your support. My question is on the inventory. So you mentioned there was a bit of a build versus where sales growth was this quarter. You mentioned that some of that was as you worked through excess inventory from the holiday season. Is there still an impact from a build and -- in your strategy to build high jewelry in the stores? And if so, can you help us to break down those two pieces? Where are we in that high jewelry build? And how are you thinking about the longer-term opportunity for inventory rationalization today?
我还要感谢马克的所有支持。 我的问题是关于库存。 所以你提到有一些构建与本季度的销售增长相比。 你提到其中一些是因为你在假日季节过剩库存。 是否仍然存在构建的影响，以及 - 您在商店中制作高级珠宝的策略？ 如果是这样，你能帮我们分解这两件吗？ 那些高级珠宝在哪里建造？ 您如何看待今天库存合理化的长期机会？
That's a great question. And you're right. The high jewelry investment that we made and we were very public about hasn't fully annualized yet based on when the purchases did begin. So that is a component of it. And then of course, because we did have softer holiday sales and frankly a slight disappointment on the top line growth into our internal projections of the tourism falling off so rapidly during the quarter. We ended up little higher balances than we otherwise would have preferred. That said, we have worked very closely with all of our planning teams. And we are still targeting and expecting to have inventories flat year-over-year when the dust settles out on January 31, 2020.
这是一个很好的问题。 而你是对的。 我们制作的高额珠宝投资以及我们非常公开的投资尚未完全年化，而是基于购买何时开始。 所以这是它的一个组成部分。 当然，因为我们的度假销售情况较为疲软，而且我们对本季内部旅游业内部预测下降的热线增长表示略微失望。 我们的余额比我们本来希望的更高。 也就是说，我们与所有规划团队密切合作。 而当我们在2020年1月31日尘埃落定时，我们仍然瞄准并预计库存量同比持平。
Our next question comes from Omar Saad from Evercore ISI.
我们的下一个问题来自Evercore ISI的Omar Saad。
I was hoping you could talk about your Fashion Jewelry initiatives for this year. There's been some big initiatives in the statement and engagement businesses since last spring over holiday. But maybe you could give us more ideas around what the innovation and newness we can see in that Fashion Jewelry business, which seems like it could be a pretty scalable opportunity for the company.
我希望你能谈谈你今年的时尚珠宝计划。 自去年春天假期以来，在声明和参与业务方面有一些重大举措。 但也许你可以给我们更多的想法，围绕我们在时尚珠宝业务中看到的创新和新颖性，这似乎对公司来说可能是一个相当可扩展的机会。
Thank you, Omar. And so for the second part of the year, but I would say also for the first part of next year, we have a pretty robust pipeline of new products. We will focus for the second part of this year on existing iconic lines, like Tiffany T, like other, where we have a very good response by customers and where we believe there is the opportunity to injecting some newness that can be very, very effective. At the same time, we will launch also some new lines in very specific segments that probably are not going to be huge in terms of sales but are very meaningful for the brand positioning and they're totally accretive. And as soon as we will get closer to the date, I will be pleased to share which are these lines. But let me say, I feel very confident about the work we are doing. It's -- I can imagine that in some of you, there is a sense of frustration because you hear me being positive about these introductions. And on the other side, you see sales that at constant rates are basically flat.
Now the reason is that, let's aside the tourism and all this, there is a factor that to modify, to evolve the assortment of a brand like Tiffany, it takes time. And we have to keep on going and adding newness. We are seeing that newness is paying back. But of course, the customer in front of the newness prefers the newness and leaves aside the existing products. So we will see -- we have to reach the critical mass in newness in order to give to the customer an option in our stores that is wider than it is now. And we are working very fast about this. But there are limits that are not just -- not really about manufacturing but is also the marketing and the time that is required in order to introduce new lines in the market without creating a [indiscernible] in the customer. Thank you, Omar.
谢谢，奥马尔。因此对于今年的第二部分，但我也会说明年的第一部分，我们有一个非常强大的新产品线。今年的第二部分我们将关注现有的标志性产品线，如Tiffany T，就像其他产品一样，我们对客户有很好的反应，我们相信有机会注入一些非常非常有效的新产品。 。与此同时，我们还将在非常具体的细分市场推出一些新的产品线，这些产品在销售方面可能不会很大，但对品牌定位非常有意义，而且它们完全可以增加。一旦我们接近约会，我将很高兴分享这些线路。但是，让我说，我对我们正在做的工作充满信心。这是 - 我可以想象，在你们中的一些人中，有一种沮丧感，因为你听到我对这些介绍持积极态度。另一方面，您看到按固定利率计算的销售额基本持平。
现在的原因是，让我们把旅游业放在一边，所有这一切，都有一个因素需要修改，一个像蒂芙尼这样的品牌的分类，需要时间。我们必须继续前进并增加新意。我们看到新的回报。但是，当然，新客户面前的客户更喜欢新颖性，而不考虑现有产品。因此，我们将看到 - 我们必须达到新的临界质量，以便为客户提供比现在更广泛的商店选择。我们正在非常快速地做这件事。但是有一些限制不仅仅是 - 不是真正关于制造，而是营销和时间，以便在市场上引入新的生产线而不会在客户中创造[音频不清晰]。谢谢，奥马尔。
Operator, it's now 9:28 a.m. So in the interest of everyone's time, we will now wrap up the Q&A session. But before ending the call, and as I think you all know, Tiffany recently decided to consolidate the IR and treasury functions. And as a result, I will be leaving the company later this year and transitioning the IR role to my colleague, Jason Wong, Tiffany's Treasurer, on August 1. I hope to see many of you in the next two months and to introduce Jason to you at meetings and conferences. Jason has a few words to share.
接线员，现在是上午9点28分。因此，为了每个人的利益，我们现在将结束问答环节。 但在结束通话之前，据我所知，蒂芙尼最近决定整合投资者关系和资金管理职能。 因此，我将于今年晚些时候离开公司，并于8月1日将IR角色转移给我的同事，Tiffany的财务主管Jason Wong。我希望在接下来的两个月内见到你们中的许多人并将Jason介绍给 你参加会议。 杰森有几句话要分享。
Thanks, Mark. I'm honored to have been selected to add the IR function to my responsibilities. And I know I have big shoes to fill following Mark's incredible 34 years at Tiffany. Mark Aaron and I are working closely together so that we can ensure a smooth transition. I'm committed to maintaining Tiffany's reputation for clear, comprehensive, consistent incredible communications to the financial community. And along with Mark Erceg, we look forward to working with our investors and security analysts to keep everyone informed about Tiffany's business and products. Please feel free to contact me at email@example.com. I'll now turn the call back over to Mark.
谢谢，马克。 我很荣幸被选中将IR功能添加到我的职责中。 而且我知道在马克在蒂芙尼度过了令人难以置信的34年之后，我已经有了大鞋。 Mark Aaron和我正在紧密合作，以确保顺利过渡。 我致力于保持蒂芙尼的声誉，为金融界提供清晰，全面，一致的令人难以置信的沟通。 与Mark Erceg一起，我们期待与我们的投资者和安全分析师合作，让每个人了解蒂芙尼的业务和产品。 请随时通过jason.firstname.lastname@example.org与我联系。 我现在将电话转回Mark。
Thanks, Jason. In closing, I want to personally thank many of you on the call for your interest and support of Tiffany since our IPO in 1987 and for the engaging and productive dialogues that we've had. I appreciate the relationships we have built. And I look forward, as I'm sure you do, to following the progress of this great company. For now, please feel free to contact me and Jason with any additional questions or comments about these results. Please note on your calendars that Tiffany expects to report its second quarter results on Wednesday, August 28, before the market opens, and we'll host a conference call. Operator, we can now conclude the call.
谢谢你，杰森。 最后，我想亲自感谢你们许多人，感谢你们自1987年首次公开募股以来对蒂芙尼的关心和支持，以及我们所拥有的富有成效的对话。 我很欣赏我们建立的关系。 我期待着，正如我确信你所做的那样，我期待着这家伟大公司的进步。 目前，如有任何关于这些结果的其他问题或意见，请随时与我和Jason联系。 请注意您的日历，蒂芙尼预计将在8月28日星期三市场开放前报告其第二季度业绩，我们将举行电话会议。 接下来，我们现在可以结束通话了。
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.
女士们，先生们，今天的电话会议结束了。 谢谢大家的参与。 您现在可以断开连接。
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