Perhaps there is still some sparkle left, even in a recession.

Tiffany & Co. today reported a 16 percent decline in fourth-quarter earnings, but the results exceeded analysts' forecasts.

The company took a big hit from loans it made to a diamond company, Tahera Diamond Corp., that filed for bankruptcy protection last month. Excluding one-time charges, Tiffany earned $1.27 per share.   

Sales rose nearly 10 percent, to $1 billion. The weak dollar continues to help Tiffany, as international sales rose 21 percent.

In January, Tiffany lowered its outlook for the year, after reporting that holiday sales at U.S. stores open at least a year fell 2 percent.

For the quarter, the retailer said U.S. same-store sales fell 1 percent. U.S. retail sales overall rose 4 percent, thanks to "higher spending per transaction," the company said.

Tiffany's chief executive, Michael J. Kowalski, had some guarded optimism for the luxury sales sector, which is increasingly dependent on the new rich in emerging economies like China, Russia, and India.

"In 2008, we expect to see robust growth in our non-U.S. markets other than Japan, and are experiencing such performance in the quarter-to-date," he said. "We remain cautious about the U.S., although comparable store sales are currently increasing slightly."