What happened

Shares of luxury jewelry giant Tiffany (NYSE:TIF) outpaced the market last month, gaining 10% compared to a 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally didn't do much to stem recent losses for shareholders, though, as the stock remains down about 16% in the past year compared to a 2% drop in the wider market.

A diamond ring.

Image source: Getty Images.

So what

Tiffany's rebound was influenced by the epic stock market surge that saw indexes enjoy their best start to a year in over three decades. The jewelry specialist's shares had also recently fallen hard, which made the stock a good candidate for a rebound in a wider rally.

But Tiffany also had some good news for investors last month. In its holiday-season earnings update, the company announced steady sales overall and healthy growth in the digital sales channel. Sure, that marked a slowdown from growth rates in prior quarters. Yet Tiffany's business wasn't as hard-hit by challenges in places like China and Europe as many investors had feared.

Check out the latest Tiffany earnings call transcript.

Now what

The company faces major challenges in the year ahead, with growth expected to slow even as CEO Alessandro Bogliolo and his team spend aggressively in areas like e-commerce, marketing, and store renovations. Investors might accept those cash outlays and send the stock higher -- but the real test will be whether sales growth recovers or turns negative in 2019.