It's no big surprise to see the bling thing fading away during these penny-pinching times, but did anyone really think that Tiffany (NYSE:TIF) would get slammed with a 24% hit in worldwide comps -- on a constant currency basis -- over the holidays?

The iconic jeweler opened 5% lower this morning on the grim news. The numbers get even worse if you key in on stateside sales, where domestic comps took a brutal 35% blow.

Again, no one figured that Tiffany would be a hotbed of free spenders, but losing more than a third of its holiday business domestically is fierce. The upscale retailer actually had decent momentum heading into the seasonally potent period, after topping Wall Street expectations during the previous quarter. That's all shot to bits now. The company expects to post earnings of $2.25 a share to $2.30 a share for the year, less than last year's profitability (excluding one-time charges).

The gloomy outlook doesn't bode well for traditional jewelers like Zale (NYSE:ZLC) and global giant Signet (NYSE:SIG). It's also potentially catastrophic for online bellwether Blue Nile (NASDAQ:NILE), which has already posted domestic declines in sales through each of last year's first three quarters. Tiffany's online and catalog sales took a 21% hit during the holidays.

The interesting players to watch here will be discounted jewelry specialists like Bidz (NASDAQ:BIDZ) and (NASDAQ:OSTK). In theory, they should hold up better than the premium jewelers. Cash-strapped gift buyers may have turned to the online dealsmiths to get more bang for their buck. If they also come up firing blanks, the jewelry industry will be in for an icy thawing period.

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