Tiffany raises forecast as lower-priced jewelry woos U.S. customers

Shares of Tiffany, known for its blue boxes and its Fifth Avenue flagship store in Manhattan, rose 7 percent in premarket trading.

The company has been struggling for the past two years to find the right balance between the pricey jewelry for which it is known and cheaper silver items that generate a quarter of sales.

"Strength in fine and statement jewelry sales continued, while sales of our new or expanded jewelry collections accelerated, led by our ATLAS collection," Chief Executive Michael Kowalski said in a statement.

The Atlas Collection is a new range that focuses on silver jewelry - including lariats, rings and pendants - priced below $500. Tiffany's profit margin in these pieces is higher than in expensive fine jewelry.

Company-wide sales at stores open at least a year rose 11 percent on a constant-currency basis in the first quarter ended April 30.

Comparable-store sales in the Americas, which account for nearly half of Tiffany's overall sales, rose 8 percent excluding currency fluctuations.

The company raised its earnings forecast for the year ending January 31 to $4.15-$4.25 per share from $4.05-$4.15 per share.

Net profit rose to $125.6 million, or 97 cents per share, in the first quarter from $83.6 million, or 65 cents per share, a year earlier.

Total net sales rose 15 percent to $1 billion on a constant-currency basis.

Analysts on average had expected a profit of 78 cents per share on revenue of $956.3 million, according to Thomson Reuters I/B/E/S.

Tiffany's shares were trading at $94.20 before the bell. The stock has risen over 13 percent in the year to Tuesday's close.

(Reporting by Devika Krishna Kumar in Bangalore; Editing by Kirti Pandey)