Preceding the opening bell to the August 28 trading session, the world’s second largest luxury jewelry retailer, Tiffany & Co. (TIF) made it known that the company’s profits slipped year-over-year but managed to come in ahead of market expectations. With the company betting on a slight recovery within the stagnant consumer markets, Tiffany revised their yearly projections upward, sending their shares higher by the close.

For the recent 2Q, TIF posted earnings of $56.8M, or $0.46 per share, compared to last year’s quarterly profits of $80.8M, or $0.63 per share, a decrease in earnings year-over-year of nearly 30%. If not for a $0.07 per share gain from tax reserve adjustments and loan recovery, the company’s earnings could have been much lower.

Quarterly sales retreated as well, falling from $729.6M to $612.5M, a decrease in revenues of more than 16%. On the positive side, Tiffany’s recent decline in sales came in better than the 22% drop in revenues witnessed in the 1Q.

On average, analysts within the industry were looking for Tiffany & Co. to record a quarterly profit of $0.33 per share on total sales figures of $602.1M.

Michael Kowalski, Chairman and CEO, stated, "While economic and retail conditions remain challenging, we were encouraged to see many stores achieving either smaller year-over-year rates of sales declines or modest sales growth compared with the past two quarters."

Tiffany currently operates in three distinct business segments: the Americas, the Asia-Pacific and European markets. The company generates nearly 50% of their total revenues from the U.S. markets.

During the quarter, the Americas markets saw sales dip 23% year-over-year to $324.9M, as same store sales within the U.S. plummeted 27%. Inside the Asia-Pacific region, revenues inched lower, falling 1% to $211.9M, with a decline in sales in Japan leading the way.

European sales dropped more than 4% for the quarter, coming in at $68.3M in total revenues.

Mark Aaron, vice president of investor relations commented, "While conditions are still challenged in the Americas, We're pleased that sales trends in the first half have been moving in the direction we've planned and believe the picture will brighten further in the second half when we compare to the steep sales declines last year."

Gross profit as a percentage of net sales came in at 55.1%, slightly lower than the previous year’s percentage of 57.8%, due in large part to an increase in product costs.

Expenses related to selling, general and administrative costs declined 14% from last year’s tally to $247.0M. The reduction was related to the company cutting staff and marketing costs, as well as variable cost reductions.

For the first half of the year, TIF managed to record net income of $81.12M, or $0.65 per share, compared to last year’s earnings of $145.16M, or $1.13 per share, a drop in income of more than 44%. Net sales during the period slipped from $1.395B to $1.13B, a decrease in revenues of nearly 19%.

Looking ahead, Tiffany upwardly adjusted their yearly projections and is now looking to post annual earnings between $1.65 and $1.75 per share, up from a previously stated range of $1.50 to $1.60 per share. The company is looking for worldwide revenues to decrease by 10% from last year’s totals. Tiffany previously expected annual sales to slip 11%.

Analysts are anticipating yearly earnings to come in between $1.52 to $1.64 per share, with annual sales at $2.53B.

Mark Aaron later stated, "Our full year sales forecast assumes no meaningful change in economic conditions from the current environment. So we have not changed our sales and earnings expectations for the second half of the year, and I should also add that we have no plans for store closings."

By the sound of the closing bell on August 28, shares of TIF surged in trading, adding more than 11%, or $3.82, to end the week at $37.57 per share. Over the course of a year, the company’s stock has reached a high of $45.80 per share and a low of $16.70 per share.