Tiffany & Co. is still looking to get its luster back.

This story first appeared in the November 30, 2012 issue of WWD. Subscribe Today.

Investors pushed shares of the upscale jeweler down 6.2 percent to $59.80 after it said high diamond and precious metal costs prompted a 29.6 percent drop in third-quarter profits.

The company, which is seeing some weakness both at home and in China, also lowered its annual earnings outlook to $3.20 to $3.40 a share from $3.55 to $3.70 a share.

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Tiffany’s sales in the Americas inched up 3 percent to $400 million with lower unit sales cutting into gains from higher prices.

“The entire volume drop was in silver jewelry at price points below $500, while every other jewelry category at higher price strata posted increased volume,” said Mark Aaron, vice president of investor relations, on a conference call.

Slower-than-projected sales in silver jewelry meant the company did not see the benefit of lower silver costs as quickly as expected. Tiffany has also been slow to see the benefits of lower diamond costs.

Sales at the company’s New York flagship gained 5 percent during the quarter. The store was closed for two days because of Hurricane Sandy and, in all, 24 of the jeweler’s doors from Washington to Boston were temporarily closed. The company said its sales forecasts incorporate some residual impact form the storm.

Revenue in the Asia-Pacific region rose 2 percent to $188 million with higher unit sales offsetting price declines.

“Tiffany is certainly not alone in experiencing some softness in Chinese consumer spending due to a plethora of economic and other factors,” Aaron said. “Geographically, the softness in Greater China, especially in Hong Kong, mostly offset modest growth in other Asia-Pacific markets.”

Aaron said Chinese consumers would continue to become more important to the luxury market.

For the third quarter ended Oct. 31, Tiffany’s profits fell to $63.2 million, or 49 cents a diluted share, from $89.7 million, or 70 cents, a year earlier.

Earnings fell 14 cents shy of the 63 cents analysts projected.

Net sales edged up 3.8 percent to $852.7 million from $821.8 million.

Dave Weiner, an analyst at Deutsche Bank, said Tiffany’s troubles were not indicative of the broader luxe market.

“The company has specific positioning issues in Asia, and the poor silver jewelry sales further confirm the difficulty Tiffany is having with more entry-level price point mix, as the aggressive price increases from the last few quarters have, for the most part, priced the brand out of its customers’ reach,” Weiner said.