Shares of jewelry retailer Tiffany & Co. (NYSE: TIF) have been surging in early trading after the company posted stronger-than-expected fourth-quarter earnings per share and issued a full-year earnings outlook above analysts' forecasts.

For the quarter, the company said that its profit slipped 16% to $118.3 million, or 89 cents per share, due to bad loans. These numbers are down from $140.5 million, or $1.02 per share, reported in the same period a year earlier. Included in the company's earnings figures were 22 cents per share related to a charge for loans made to Tahera Diamond Corp. Excluding that, Tiffany earnings numbers would have come to $1.27 a share. Analysts, on average, expected the company to show quarterly earnings of $1.21 per share.

The jewelry retailer posted growth of 10% for its fourth-quarter revenue, which climbed to $1.05 billion from $958.9 million a year earlier. Sales matched analysts' forecasts, according to Thomson Financial. U.S. retail sales showed a gain of only 4% to $527.9 million, following slowing same-store sales, while international sales surged 21% to $422.6 million.

Despite a weak economy that has put a curb on consumer spending, Tiffany had a good overall 2007. For the year, net income rose 20% to $303.8 million, or $2.20 per share, while sales saw a respectable growth of 15% to $2.94 billion.

Looking ahead to the company's full year numbers, Tiffany forecast adjusted 2008 earnings in a range between $2.75 and $2.85 per share with sales increasing about 10% to $3.23 billion. Analysts, on average, predicted a profit of $2.49 per share on revenue of $3.18 billion.

Traders expressed their enthusiasm over the company's positive earnings and optimistic outlook, pushing the stock over 12% higher in early trading.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.