After a slightly disappointing holiday season last year, it looks as if customers of Tiffany & Co. (NYS: TIF) are once again hankering for the sophisticated jewelry and specialty items the swanky icon has to offer.

Other than slightly lower-than-expected EPS in its Q4 report, Tiffany had mostly good news to impart. Revenue slightly outpaced forecasts by $10 million, and the company noted strong sales worldwide. The company's outlook for 2012 is even better, with expectations of global sales increases of 10% and EPS of $0.31 to $0.41 higher than that forecast by analysts.

Things were a little dicey for Tiffany in 2011, and it wasn't alone. Holiday crowds held their spending in check and competitors Signet Jewelers (NYS: SIG) and Zale also saw their margins squeezed by rising gold and gem prices. Zale has definitely been the poor cousin here, though, and rumors have been swirling that its best bet for survival is to be swallowed by Signet, which has weathered the recession with much more panache. Signet is looking to expand, and has hinted that an acquisition might be the preferred method of achieving that goal.


Internet diamond vendor Blue Nile (NAS: NILE) has also had some hard times, barely weathering a perfect storm last November with a dreadful Q3 report followed by the resignation of its CEO. Fourth-quarter results also were subpar, missing badly on both EPS and revenue. The company blamed increased diamond costs and a lack of interest in its wares on the part of wealthy clients. Investors have punished the company's stock, which has lost more than 35% of its value from this time last year.

Tiffany has fared a bit better; well-heeled customers kept buying, but the midrange offerings didn't do as well. Still, January showed improvement and, unlike Blue Nile and Zale, Tiffany was able to increase prices, thereby successfully passing on higher commodity costs to customers while concurrently raising revenues at stores that had been open for business for a year or more.

Tiffany still looks good
The company's guidance for 2012 has allayed investors' fears somewhat, particularly after Tiffany cut its earnings forecast earlier in the year. The improving economy can only be good news for the jeweler, helping to bring back those less affluent shoppers. Personally, I believe the cachet of being a nearly 150-year-old jeweler with a flagship store on Manhattan's Fifth Avenue can't hurt, either.

The company is going forward with its expansion plans, on track to open 24 new stores in 2012, in line with its robust forecast for this year. The company has plenty of cash on hand, and even bumped up its dividend payment last year. It looks as if the recent blip was nothing more than a rough spot that is even now being polished to a lasting sheen.

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At the time this article was published Fool contributor Amanda Alix owns no shares in the companies mentioned above.Motley Fool newsletter services have recommended buying shares of Blue Nile. Motley Fool newsletter services have recommended buying puts on Tiffany. Motley Fool newsletter services have recommended creating a position in Blue Nile. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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