What happened

Shares of jeweler Tiffany & Co. (NYSE:TIF) stock popped as much as 6.3% in early trading Tuesday, and remained up 3% as of 12:45 p.m. EDT after the high-end diamond-hawker reported Q1 sales that missed estimates -- but earnings that beat expectations.

Tiffany reported  $1 billion in Q1 sales, down 3% year over year and somewhat short of expectations. However, the company's $1.03 per share profit -- down 10% year over year -- nonetheless exceeded estimates by $0.02.

Diamond

Image source: Getty Images.

So what

Tiffany CEO Alessandro Bogliolo blamed both "foreign exchange headwinds" and also "dramatically lower worldwide spending attributed to foreign tourists" for the quarter's declines in both sales and earnings. More encouragingly, though, he noted that "sales in China ... grew over last year's very strong sales results" -- and pronounced himself "pleased" with that not-small feat in the midst of a trade war.

Now what

Investors may also have been encouraged by Tiffany's guidance for the rest of this year.

Management forecast "low-single-digit percentage" growth in sales this year as compared to last -- a seemingly modest prediction, yet still a nice contrast to the declining sales we saw in Q1, and to analysts' expectations  of more sales declines in Q2. Management also noted that it thinks net earnings per diluted share will increase "by a low- to mid-single-digit percentage" this year, in line with Wall Street's expectation for 5% growth in profits -- even after factoring in the effects of higher tariffs in China.

In other words, things weren't great in Q1, but they weren't quite as bad as expected, and despite the odds, they seem to be getting better. That's what investors were hoping to hear.