Tiffany & Co and Signet Jewelers Ltd reported better-than-expected profits for the Valentine's Day quarter as shoppers resumed buying pricey jewelry.

Upscale Tiffany also raised its full-year earnings forecast and said global sales at stores open at least a year rose 10 percent during the quarter. Its shares rose 5.5 percent, while Signet advanced 1.3 percent.

Much of Tiffany's gain came from soaring sales abroad and at its Fifth Avenue flagship store in Manhattan, as well as from increased demand for items costing upward of $50,000, such as diamond rings and necklaces.

Tiffany reported brisk sales across the price spectrum, including engagement rings and designer lines like Elsa Peretti and Paloma Picasso.

Similarly, Signet Chief Executive Officer Terry Burman told investors his company's growth resulted in part from a continued recovery in spending by the upper-middle-market consumer from depressed levels last year.

Tiffany raised its full-year profit forecast to a range of $2.55 to $2.60 per share, above the average Wall Street estimate of $2.51. Last week the company increased its dividend for the second time this year, citing confidence in its long-term prospects.

Tiffany expects sales to rise 11 percent this year. It plans to open 16 stores worldwide, raising inventory levels by a high-single-digit percentage rate to accommodate that growth.

In a research note to clients, Jefferies & Co analyst Randal Konik said Tiffany was well-positioned for an upswing in luxury spending and that he expected the company to continue to gain market share against small independent jewelers.

LID ON SPENDING?

On a conference call, a Tiffany executive nonetheless warned that the state of the global economy was giving it reason to remain tempered in its spending.

Signet's Burman said any growth must come from market share gains.

With the economic environment remaining uncertain, we're not planning on meaningful market growth, Burman said.

As if to validate their caution, the U.S. Department of Commerce on Thursday revised its first-quarter U.S. gross domestic product figures downward to growth of 3 percent rather than the previous estimate of 3.2 percent.

Sales at Tiffany rose 22 percent to $633.6 million in the first quarter ended on April 30. Asia led the growth with a 50 percent increase that did not include Japan, the only market where the company's sales fell.

Profit more than doubled to 50 cents per share. Excluding items, earnings of 48 cents per share were way ahead of analysts' expectations of 37 cents, according to Thomson Reuters I/B/E/S.[ID:nN2797878]

Sales were up 26 percent at the flagship store, which accounts for about 10 percent of revenue. Tiffany said they could have risen more if the eruption of an Icelandic volcano had not forced some tourists to cancel their trips to New York.

SIGNET LURES UPSCALE SHOPPERS

Signet's sales at its upscale Jared The Galleria of Jewelry chain rose 15.8 percent, boosting the company's overall revenue 6.2 percent to $810 million.

Profit nearly doubled to 60 cents per share, compared with the analysts' forecast of 42 cents.

Signet also operates the more modestly priced Kay Jewelers chain in the United States and Ernest Jones in Britain.

Companywide same-store sales were up 5.8 percent, in part because of a 5.1 percent increase in average prices on most items in the United States, where Signet sees the bulk of its business.

The average unit selling price at Jared, which accounts for about one-quarter of Signet's overall sales, was $741, more than double that at Kay's.

Signet, whose customers are generally less affluent than Tiffany's, has won market share from rival Zale Corp . On Wednesday, Zale reported a quarterly loss and a 2.2 percent drop in same-store sales.

Even Zale shares appeared to get a lift from Signet and Tiffany's results, rising 5.2 percent on Thursday. Burman hinted that Signet had benefited from Zale's recent liquidity woes and the bankruptcies of smaller rivals in recent years.

Many competitors are under financial pressure, Burman said. We also continue to take advantage of the capacity withdrawal from this sector over the last two years.

(Additional reporting by Ben Klayman in Detroit; Editing by Lisa Von Ahn)

Japan United kingdom Iceland