The people behind the little blue box, Tiffany & Co. (TIF) issued a mixed report today on the company’s fourth quarter and full-year results for the period ending January 2010. Fourth quarter profits rose to $140.4 million (EPS of $1.10) from last year’s dismal $31.1 million (EPS $0.25). Revenues also grew nearly 15% compared with the year-ago quarter.

Tiffany’s forecast for the next 12 months includes an 11% increase in sales, an increase in operating margin, and net earnings from continuing operations of $2.45-$2.50 per diluted share. Analysts had been expecting EPS for 2010 of $2.43.

More than half of the company’s 2009 profit came in the fourth quarter. This could be a sign that high-income customers are beginning to head back to stores after a year of austerity, or it could be something else.

In Tiffany’s Americas division, sales grew 14% in the fourth quarter compared with the year-ago quarter. But annual sales were down 11%. Same store sales were up 15% in the quarter, but down 15% for the year. The company’s Asia-Pacific region saw sales rise 14% in the fourth quarter and 4% year-over-year. The European region saw gains of 29% quarter-over-quarter and 10% year-over-year.

Tiffany also lowered its net inventories by 11% in 2009 by reducing its level of finished goods. Very likely the company was working its way through its precious metals inventory, using the stockpile it built up through 2008 at lower-than-current market prices. That was good for Tiffany.

What’s not so good is that the company now has to start using the gold and other precious metals it bought at higher, 2009 prices and will have to continue to buy at even higher 2010 prices. The effects should be noticeable in the second half of this year, particularly in the company’s gross margins.

If customers don’t return to the stores, Tiffany faces a more modest 2010 than it is predicting. The good news is that some 58% of the company’s business comes from outside the US, where sales were especially soft in 2009, before rising again in the fourth quarter. Foreign sales, particularly in Asia-Pacific, could keep Tiffany’s moving ahead.

One last item to mull over: did the U.S. government’s stimulus package drive the fourth quarter boost at Tiffany’s, or was it the bonus payments to investment bankers? Will either of these be available in the fourth quarter of 2010?

Tell us what you think here.

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