Before digging into Tiffany's (NYSE:TIF) second-quarter earnings report and listening to management's conference call, I wasn't expecting much from the luxury retailer. After all, the current economic climate doesn't exactly encourage shoppers to go out and buy jewelry, especially the high-priced kind.

But … I came away surprised, and even a little impressed.

Tiffany beats
That Tiffany beat analysts' estimates shouldn't be too much of a surprise. Retailers ranging from luxury department store Saks (NYSE:SKS) to mid-tier Kohl's (NYSE:KSS) to low-end Dollar Tree (NASDAQ:DLTR) have been beating expectations all month.

Tiffany's second-quarter net earnings were $0.46 per share, down from $0.64 in the year-earlier period, but well above analyst expectations of $0.33. Excluding one-time benefits, Tiffany still beat expectations by $0.06. Management also upped its fiscal 2009 earnings outlook from $1.50-$1.60 to $1.65-1.75.

More impressive than its quarterly results is management's strategy to weather the current storm without losing sight of its long-term goals. The company remains focused on keeping its brand strong and being positioned to take advantage when the economy shows real growth.

Still room to improve
The earnings upside was due to strong cost controls and sales that didn't come to a screeching halt (as some might have suspected). Even so, Tiffany's sales figures were pretty bleak. On a constant-currency basis, sales dropped 14%, while with same-store sales plummeted 16%. Its U.S. business was worse: Same-store sales were off 27%.

However, there were some (relative) bright spots. Sales in its Asia-Pacific region declined by only 1%, but comps were down 4%. Europe was better: Although sales were down 4%, comps jumped an impressive 4%.  

And Tiffany continues to be a relentless cost cutter. Operating expenses were slashed 15% from the year-earlier quarter, although the cuts did not fully offset the sales decline.

Wait for the sale
Still, I would avoid chasing the stock at its current price. After Friday's 11% move higher, Tiffany shares are trading at better than 20 times the high end of management's new fiscal 2009 EPS guidance. That doesn't compare favorably to high-performers such as Coach (NYSE:COH) with a P/E of 15 or Aeropostale (NYSE:ARO) at 15. Tiffany's valuation would be a stretch if times were good. It is a non-starter when the specialty retailer is looking for ways to grow sales.

That said, I would treat Tiffany like any good bargain shopper would -- and wait for the company's shares to go on sale. In this case, it means waiting for a pullback closer to $30 or cheaper before considering taking the plunge.

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Fool contributor Rob Plaza does not own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.