Tiffany and TJX: Comparing Financial PerformanceCharles Lewis Tiffany opened his first store in downtown Manhattan in 1837. Today, Tiffany & Co. operates as a high-end specialty retailer worldwide. It is mostly known for its exquisite jewelry, but also has additional luxury items in its product assortment. The Tiffany robin's egg "blue boxes" have become a ubiquitous status symbol, representing the company's brand quality and craftsmanship. Tiffany & Co. has a different strategy and marketing approach than other national retailers. Throughout its history, the company's mission has been to enrich the lives of its customers by creating enduring objects of extraordinary beauty that will be cherished for generations. Tiffany & Co. has accomplished this by crafting beautiful designs, using fine-quality materials and expert workmanship, and presenting those products to its customers at stores in high-end locations, within some department stores, and online.TJX Corporation, on the other hand, consists of a mix of stores under the names of T.J.Maxx, Marshalls, HomeGoods, and Sierra Trading Post in the United States (with additional stores under various names internationally). TJX strives to offer exceptional value through its four pillars of great fashion, brand, quality, and price. It works with a variety of national brands so that its merchandise assortments at these stores are ever changing. It is willing to purchase less-than-full assortments of items, styles, sizes, and quantities from vendors and pass on the cost savings to its customers. So that it doesn't have to completely rely on merchandise from national-brand vendors for its assortment offerings, TJX also offers private-label merchandise, which is produced specifically for TJX only. It keeps moderately low inventory levels that help produce relatively fast inventory turns while maintaining lower operating expenses, resulting in relatively higher net operating profit margins than its competitors (see Exhibit 1).Exhibit 1 Financial Data for Tiffany and TJX (in thousands)Sources: TJX Annual Report; Tiffany & Co. Annual Report. 

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1. Create a Table and Calculate the following for both Tiffany & Co. and TJX using data from the abbreviated income statements and balance sheets in Exhibit 1 (Refer to the case study). 。 Cost of goods percentage ⚫ Gross margin percentage ⚫ SG&A expense percentage • Operating profit margin percentage • Net profit margin (after taxes) percentage: how much profit о for makes divided by net sales • Inventory turnover • Asset turnover: retailer's net sales divided by assets 。 Return on assets (ROA) percentage 2. For A-H, compare and contrast the calculated financial figures for Tiffany & Co. and TJX о • Which retailer has a higher gross margin? Higher operating expenses as a percentage of sales? Higher operating profit margin percentage? Higher inventory turnover and asset turnover? Higher ROA? 。 then analyze and discuss why the percentages and ratios differ for the two retailers. 3. Determine which retailer has the better overall financial performance. How can both retailers improve their performance in the future? Refer to growth opportunities and performance measures in the chapter. TIFFANY & CO. Income Statement TJX (YEAR ENDING) Income Statement Net sales Less: Cost of goods sold Gross margin $4,104,900 1,613,600 2,491,300 $30,944,938 22,034,523 8,910,415 Less: SG&A expenses 1,731,200 5,205,715 Operating profit margin 760,100 3,704,700 Less: Interest expense 49,000 46,400 Other expense (income) 1,200 0 Net income before taxes 709,900 3,658,300 Less: Taxes 246,000 1,380,642 Net income after taxes 463,900 2,277,658 Balance Sheet Balance Sheet Cash $ 843,600 $2,095,473 Accounts receivable Inventory 206,400 2,225,000 238,072 3,695,113 Other current assets 233,400 743,902 Total current assets 3,508,400 6,772,560 Fixed assets 935,800 4,137,575 Long-term assets 685,500 589,347 Current liabilities 729,900 4,402,230 Long-term liabilities 1,470,300 2,790,177 Stockholders' equity 2,929,500 4,307,075 Total liabilities and equity $5,129,700 $11,499,482 1. Create a Table and Calculate the following for both Tiffany & Co. and TJX using data from the abbreviated income statements and balance sheets in Exhibit 1 (Refer to the case study). 。 Cost of goods percentage ⚫ Gross margin percentage ⚫ SG&A expense percentage • Operating profit margin percentage • Net profit margin (after taxes) percentage: how much profit о for makes divided by net sales • Inventory turnover • Asset turnover: retailer's net sales divided by assets 。 Return on assets (ROA) percentage 2. For A-H, compare and contrast the calculated financial figures for Tiffany & Co. and TJX о • Which retailer has a higher gross margin? Higher operating expenses as a percentage of sales? Higher operating profit margin percentage? Higher inventory turnover and asset turnover? Higher ROA? 。 then analyze and discuss why the percentages and ratios differ for the two retailers. 3. Determine which retailer has the better overall financial performance. How can both retailers improve their performance in the future? Refer to growth opportunities and performance measures in the chapter. TIFFANY & CO. Income Statement TJX (YEAR ENDING) Income Statement Net sales Less: Cost of goods sold Gross margin $4,104,900 1,613,600 2,491,300 $30,944,938 22,034,523 8,910,415 Less: SG&A expenses 1,731,200 5,205,715 Operating profit margin 760,100 3,704,700 Less: Interest expense 49,000 46,400 Other expense (income) 1,200 0 Net income before taxes 709,900 3,658,300 Less: Taxes 246,000 1,380,642 Net income after taxes 463,900 2,277,658 Balance Sheet Balance Sheet Cash $ 843,600 $2,095,473 Accounts receivable Inventory 206,400 2,225,000 238,072 3,695,113 Other current assets 233,400 743,902 Total current assets 3,508,400 6,772,560 Fixed assets 935,800 4,137,575 Long-term assets 685,500 589,347 Current liabilities 729,900 4,402,230 Long-term liabilities 1,470,300 2,790,177 Stockholders' equity 2,929,500 4,307,075 Total liabilities and equity $5,129,700 $11,499,482