Lower returns and profit margins
Tiffany recorded weak returns in fiscal 2007. Its return on assets, return on investments and return
on equity for twelve months ending January 2007 were 8.9%, 11.5% and 14.1%, respectively, lower
than LVMH, a close competitor of the company. LVMH recorded return on assets, return on
investments and return on equity for twelve months ending December 2006 as 20.4%, 15.6% and
20.4%.
The company recorded an operating margin and net profit margin of 15.7% and 9.6%, respectively,
in fiscal 2007, lower than LVMH, a close competitor of the company. LVMH recorded operating
margin and net profit margin of 19.9% and 14.1%, respectively, for fiscal year ended December
2006.
Lower returns and profit margins reflect the inability of the management to deploy assets in profitable
avenues, and this could result in decreasing investor confidence.