Just imagine how impressive Tiffany (NYSE:TIF) would be looking these days if the Japanese market were to recover.

Even with sales continuing to lag in Japan, Tiffany looks nearly flawless. In the first quarter, it reported increased earnings, sales, and comps, even with higher costs for precious metals. Although sales, general, and administrative expenses were higher, they're primarily the result of more aggressive marketing, which seems to be paying off quite nicely.

In the first quarter, Tiffany increased earnings by 15.1% to $49.7 million. Margins were lower in the quarter, largely as a result of higher product costs and an increase in sales of wholesale diamonds.

Tiffany's sales were also up 15.1% to $620.9 million, with comps gaining 8%. Once again, sales rose across the board, excluding Japan, which posted a 3% drop. The biggest gain came from the region referred to as Other Asia-Pacific, which generated 35% sales growth. Europe also enjoys its bling, as demonstrated by its 27% increase in sales. U.S. sales gained 15% thanks to a 26% jump in comps at its flagship New York location.

Although the balance-sheet items are moving in the opposite direction than investors would hope, I'm not too concerned about it. The increase in inventory is the result of more store openings. Although cash was much lower compared with a year ago, debt also fell a bit. Meanwhile, Tiffany continues to add value for its shareholders. It repurchased 520,618 shares of its common stock in the quarter at an average price of $48.01 per share. Based on today's prices, which are hovering near $52 per share, it looks as though Tiffany got a bargain.

Elsewhere, Tiffany continues to grow its wholesale watch business. It announced plans to launch a major expansion in 2008 in its prime U.S. and international markets. This will likely affect Movado (NYSE:MOV), which recently announced a lowered outlook for the year.

Much like the products it sells, Tiffany is now priced at a premium. Even with its increased guidance of earnings per share between $2.10 and $2.15, the jeweler boasts a forward P/E ratio of about 25. However, I still think it has plenty of room to grow overseas, and it's still waiting for Japan to bounce back. While Tiffany is a bit pricey for my taste, I would look to make a purchase whenever its share price takes a dip.

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Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article. The Fool has a disclosure policy.