Tiffany & Co. (NYSE: TIF) shares rose over five percent in today’s trading after it boosted its fiscal 2008 earnings forecast above its two previous forecasts and analyst estimates. The retailer now expects a rise of at least 10% in its worldwide sales based on high-single-digit percentage increases in U.S. retail sales. This took Wall Street by surprise given the company’s recent cut in its full-year earnings forecast after a drop in U.S. sales hit overall same-store sales growth amid a slowdown in consumer spending. So, is Tiffany & Co. a stock that you should consider for your portfolio?

Chairman and chief executive Michael Kowalski noted that sales improved modestly in January month-over-month thanks in some part to continued strength in Europe and the Asia-Pacific region outside of Japan. Consequently, the company is looking to see modest growth in the United States while planning for continued healthy international sales growth throughout the year. Some are insisting, however, that consumer spending in high-end discretionary purchases like Tiffany & Co.’s products may be the next to fall after the apparel industry’s poor results yesterday.

So, will the economy eventually weigh on this company? Well, a recent report by the Federal Reserve showed an abrupt slowdown in consumer credit card borrowing while delinquencies on credit cards continue to rise. Furthermore, recent reports by MasterCard have indicated that many consumers are switching their spending from discretionary items like appliances and jewelry to staples like gas and groceries. These are all clearly bad trends for Tiffany & Co., which relies on such discretionary spending on the high-end in order to jump their sales. This has already affected countless retailers and even some other luxury players, which suggests that Tiffany & Co. is not immune to problems.

In the end, it will be interesting to see if Tiffany & Co. can avoid the problems facing its neighbors and perhaps even stave off any marginal U.S. results in the future with strong international demand. Regardless, this is definitely an interesting company that is worth watching since it could end up outperforming amid larger economic weakness.

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