Investors might have seen the move coming for months, but now it's official: Tiffany & Co.'s (NYSE:TIF) rebound plans have hit a snag.

In a holiday-season sales update, the luxury retailer announced weakening demand across most of its global footprint, with revenue flattening in a few key markets. The slowdown will hurt results for the current fiscal year, and management expects the poor trends to continue at least into the first half of 2019.

I'll have more on that outlook in a moment, but first, let's take a closer look at the jewelry giant's holiday performance.

A difficult holiday season

Global sales were flat after accounting for currency exchange rate shifts. This overall result fell below the modest growth target that CEO Alessandro Bogliolo and his team had affirmed back in late November. It also marked another slowdown in what's turning out to be a broadly worsening demand trend.

Comparable-store sales had risen 7% in the fiscal second quarter and decelerated to a 5% increase in the third quarter. This week's update implies that the figure took another step lower in Tiffany's fourth quarter.

A diamond ring on a black surface

Image source: Getty Images.

Executives said they saw pockets of healthy demand, including in Japan, mainland China, and across the globe in the digital sales channel. However, these gains were overwhelmed by softness in a key demographic: Chinese tourists. Management said that lower spending by this group in the U.S. and Europe pushed results lower, just as it did last quarter. The U.S. geography managed flat results over the holidays compared to a 5% increase in the third quarter. Japan's growth rebounded to a 4% rate from 1%, and Europe's 1% decline constituted a slightly worse performance. "Overall holiday sales results came in short of our expectations," Bogliolo explained.

The impact going forward

The holiday update didn't include metrics related to expenses or profitability. For those figures, investors will have to wait for the retailer's full fourth-quarter report in late March. But Tiffany did warn that the slower holiday sales results would mean that revenue will grow by between 6% and 7% for the full year rather than the high single-digit range the company had previously targeted. Net earnings will land at the low end of their goal, which spans from $4.65 per share to $4.80 per share.

Things won't get much easier in early 2019, either. Tiffany says it expects demand challenges to reduce sales growth to a low-single digit range for the full year while elevated expenses ensure losses through the first two quarters. These spending initiatives include extra marketing and advertising outlays, store renovations, and a bulked-up e-commerce infrastructure. However, while the costs are concrete and immediate, their impact on sales growth is uncertain and likely won't show up for several quarters.

The update includes some overall bad news for the business on both the top and bottom lines, but investors have been bracing for just this scenario by sending Tiffany's stock lower in December and in November. Those moves could support the stock price in the wake of the retailer's sales update heading into March's detailed earnings release. But investors can't count on a rebound for the shares until the company can demonstrate that its global demand trends have stabilized.

Check out the latest Tiffany & Co. earnings call transcript.