2012 has been a trying year for a lot of high-end retailers, and jewelry runner Tiffany (NYSE:TIF) is no exception. The company has fallen short of expectations -- or expectations have been too optimistic -- for the last four quarters. For the quarter being reported this Thursday, analysts are expecting $0.62 per share in earnings, which is a considerable drop from the company's third-quarter earnings per share last year, which came in at $0.70. What can investors expect this time around?

Put a ring on it
If you had to pick one word to describe the expectations for Tiffany, it would be "slow." Analysts have forecast top-line growth, but only 4%. That would be $858 million in revenue for the quarter. But even that might be a stretch. Last week, Zale (NYSE: ZLC) saw a mere 2% increase in revenue for its quarter, though same-store sales were stronger. In the previous quarter, Zale grew sales 8% and outpaced Tiffany, which only saw a 2% increase in its top line.

But there is a bright side. Tiffany's management team has been relatively good at forecasting its own sales, even if the market hasn't been. For the quarter to be reported, management has said all along that it expects a dip in earnings, but based on the projected full-year position, it should be looking for an increase in revenue. That means that Tiffany might be able to hit analysts' forecasts for revenue, which would go a long way toward dampening any damage the release has.

That pesky bottom line
But strength -- or less weakness -- in its revenue stream isn't going to save Tiffany. In order to maintain, it needs to hit that $0.62 per share earnings target. The confounding factor is that management has said all along that it expects operating margins to be compressed. That's why it forecast a fall in overall earnings. But investors should be looking for a larger gross margin than last quarter, while still compressed compared to last year. That last quarter gross margin was 56%, while last year in the third quarter it was 58%. Based on the two results, I'd be on the lookout for close to 57% on Thursday.

But when we boil it down to the bottom line, Tiffany is just not going to make as much this year as it did last year. That doesn't mean it's a bad investment, it just means that Tiffany is going through a transition. The company recently opened a new European flagship store in Paris, and last month, it changed its management structure to give more responsibility to two of its better leaders.

But Tiffany is also coming out of a cost position that other high-end brands managed to avoid. Companies like Michael Kors (NYSE:CPRI) have managed to keep margins high due to increasing demand, and steady materials costs. Tiffany is still suffering margin compression from cost increases associated with metal and diamonds, which it should be free of by next year.

The last word on Tiffany's earnings
This Thursday, I'm expecting Tiffany to be within analyst expectations. In part because those expectations have been tempered, and in part because Tiffany is slowly moving out of the worst part of its most recent margin difficulty. While the company is not going to blow anyone out of the water, it continues to have the strength of a household brand name equated with luxury. As long as the company can hold its head above water, it should continue to grow slowly and pay a regular dividend.

Obviously, we at the Motley Fool never recommend buying a stock in an attempt to time the market. Tiffany may go up or down this week based on what people think it should do, not what it actually does. But for investors looking to diversify for the long run, and looking for a strong brand, Tiffany might be a good company to consider. If you're looking for more explosive growth in the high-end market, check out the Fool's new premium report on Michael Kors. The company has been on an absolute tear over the past year, with the stock more than doubling in value. To get all the details on this rocket ship of a brand, sign up for your copy of our report by clicking here.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.