M c I n t i r e I n v e s t m e n t I n s t i t u t e 1

McIntire Investment Institute At the University of Virginia

Tiffany & Co. (NYSE: TIF)

Kana Yoshizawa| April 14th 2011

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Agenda

•  Business Overview

•  Stock Summary

•  Thesis points

•  Risks

•  VAR

•  Recommendation

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Founded in 1837

Headquartered in New York

Engages in the design, manufacture, and retail of fine jewelry.

Approximately 220 stores worldwide

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Business Overview

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Basic Stock Information

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Stock Summary

Share Price : $63 Market Capitalization: $7.84B P/E: 21.42 EPS: 2.87 ROE: 10.60%

52-Week Range : $35.81 – 65.76 Average Volume (3 Months): 1,880,320 Total Cash: $740.87M Total Debt: $688.24M Profit Margin: 11.94%

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TIF is a Compelling Long

1) Good product and service

2) Strong against Economic crisis

3) Expansion to global market

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Good Product and Service

Huge support from the celebrities

Attract more customers & Enhance brand image

The Accessories Council honored Tiffany & Co. with the Hall of Fame award at the

14th annual ACE

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Not just from the celebrities…

Bulgari

Tiffany & Co.

Cartier

Harry Winston

Buccellati Graff

Piaget Chopard

How popular?

•  The most wanted brand for engagement and marriage ring in Japan

•  Survey result •  Famous for its distinguished

service and special thank you card.

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Voices from the customers…

I’m so glad that I bought my marriage ring from Tiffany.

It’s just so stunning.

It offers great service, and it

stands for a certain class and taste.

Words of mouth. It's frequently recognized by my colleagues & cherished by perfect couples around me

The brand. i know so many guys save money to buy this for their girlfriends. many girls love this brand for the sake of this brand

to reflect a social status. It represents elegance and royalty.

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Outstanding Stock Performance

Quickly recovered from Economic fluctuations

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Strong against Economic Crisis

1400000

1450000

1500000

1550000

1600000

1650000

1700000

1750000

1800000

1850000

2006 2007 2008 2009 2010

Financial Crisis?

Strong recovery in 2010

Inflationary pressure?

Prices increased since 2005, but no effect.

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2006 2007 2008 2009 2010 In 2009, total sales in Asia-Pacific increased 17% due to an increase in the number of units sold.

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Outstanding Stock Performance

Return on Invested Capital always higher than Weighted Average Cost

of Capital

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Expansion to Global Market

Asia-Pacific region

18%

Europe

12%

Japan

18%

America

51%

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What’s the next step…?

    2008   2009   2010  

Americas   $1,586,636   $1,410,845   $1,574,571  

Asia-Pacific   $363,095   $426,296   $549,197  

Japan   $533,474   $512,989   $546,537  

Europe   $273,094   $306,321   $360,831  

International growth could lift EBIT margins over time.

Non-USA regions are becoming more and more profitable and strong against

financial crisis

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Future Expansions

14 stores

Will grow to 30 stores by the end of 2015

China

29 stores

Doubling of the store count in Europe over the next 6-7 years ( 3-5 stores per year)

Europe

84 stores

Opening 150 stores in the US in 8 years

lead to 7-9% of growth and should drive 13-15% annual EPS growth.

America

14% increase in inventory in 2011 according to 4Q, thus expected to see a increase in 2011 to support sales growth, new store openings.

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In Comparison to the competitors…

Europe companies were consistently strong through 4Q, thus there’s room for

market share gains in this region.

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• -might shifts investors’ interests

Increase in other commodities’ prices

• Slow economic recovery • Earthquakes in Japan • Stores in Kanto and Tohoku (>50%) were closed

• Limitations from the government in foreign countries

Macroeconomic environment and international developments

• Increasing Diamond cost inventory risk • Supply limitations

Supply of Diamonds

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Risks

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VAR

Online Survey

•  Very friendly •  “There’s definitely more customers from

local China now…The Chinese customers are now starting to purchase in China rather than in Europe/America when they are traveling. We expect to see increase in our sales in the next few years”

Interview with store Manager in Shanghai

•  Luxury good industries tend to be very procyclical, thus it is very important to keep on track with the global economic performance

Professor Eric Young

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Recommendation

Recommend MII initiates a 3.5% position if the 1Q indicates that Tiffany & Co is well-

positioned and undervalued.