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By Bloomberg

Tiffany & Co., the world’s second-largest luxury jewelry chain, predicted a 30 percent decline in net income this quarter as currency headwinds and sluggish sales hamper results.

The drop in the first quarter will be followed by a more “modest” decrease in the following period, the New York-based company said in a statement on Friday. Worldwide sales will decline about 10 percent in the first quarter, partly because of a slowdown in the Americas region, Tiffany said.

The stronger dollar has hit Tiffany with a double-whammy by lowering the value of overseas sales and making it less attractive for foreign tourists to come to the U.S. to shop. The dollar gained 12 percent against the euro and yen in 2014. As it tries to bounce back, Tiffany has been raising the prices of some jewelry and marketing more entry-level fashion pieces.

“You’re staring in a 30 percent hole,” said Brian Yarbrough, an analyst at Edward Jones in St. Louis. “How are you going to make that up? This becomes a second-half story, and that concerns me.”

The shares fell 4 percent to $82.93 at the close of trading in New York. The stock has declined 22 percent this year.

Americas Region

Tiffany had been counting on the U.S. to help offset slowing sales overseas. Instead, the Americas region fell into its own slump during the holidays and will continue to crimp sales in 2015.

“We knew the impact of the strong dollar was going to hurt their overall results,” said Yarbrough, who has a hold rating on the stock. “What hurts them even more is tourists aren’t traveling.”

While the new fashion collection, Tiffany T, performed well in the Americas, the line may have pulled sales from other categories, including entry-level silver pieces and fine jewelry, spokesman Mark Aaron said on a conference call.

For the year, the company expects minimal earnings growth from the $4.20 a share it posted last year. Analysts had estimated $4.41 on average, according to data compiled by Bloomberg.

The company is being conservative with its outlook, President Frederic Cumenal said in the statement.

“Tiffany is facing challenges from global economic uncertainties, especially from the effect of a strong U.S. dollar,” he said. “As a result, we have adopted a cautious approach in our planning for the coming year.”

Tiffany may look to offset the impact from currency by further raising prices, said Dorothy Lakner, a New York-based analyst at Topeka Capital Markets. The company will also revamp its marketing, which focused too heavily last quarter on Tiffany T, she said.

Fourth Quarter

Net income amounted to $196.2 million, or $1.51 a share, in the fourth quarter, which ended Jan. 31. That compares with a loss of $103.6 million, or 81 cents, a year earlier, when an arbitration award to Swatch Group AG increased costs. Analysts had estimated about $1.50 on average for the most recent period, according to data compiled by Bloomberg.

Tiffany also is going through a change of leadership. Cumenal will take over the chief executive officer job on April 1, the company said last year. Current CEO Michael Kowalski will remain on the board as nonexecutive chairman.

Tiffany ranks second behind Cie. Financiere Richemont SA in global sales of luxury jewelry.