Tiffany's sales tumbled over the holidays and it expects the next few months to be harrowing

Tiffany & Co's sales fell 5.6 percent in the holiday quarter as a strong dollar hurt tourist spending at its stores in the United States and ate into revenue from other markets.

Sales at the upscale jeweler's established stores open for at least a year fell 10 percent in the Americas region in the fourth quarter.

Its net income fell to $163.2 million, or $1.28 per share, in the quarter ended Jan. 31, missing the expectation for $1.46 according to Bloomberg. A year earlier, net income was $196.2 million, or $1.51 per share.

Revenue fell to $1.21 billion from $1.29 billion, roughly in line with expectations.

The company gave the following outlook (emphasis ours):

We are assuming that sales and earnings growth in 2016 will continue to be pressured by various factors including a further strengthening of the dollar, along with volatile and uncertain economic and equity market conditions that will likely affect consumer spending. While it is challenging to forecast demand in such an environment and despite weak sales trends to-date in 2016 in most regions, our forecast assumes gradual improvements later in the year.

Based on sales trends in the current quarter-to-date and an assumption of gradual improvement over the course of the year, management expects that earnings per diluted share in the first quarter may decline by 15-20%, followed by a 5-10% decline in the second quarter and a resumption of growth in the second half.

Apart from challenges posed by the strong dollar, Tiffany's is also facing a secular shift in how Americans buy jewelry, as Business Insider's Mallory Schlossberg reported in January.

Basically, jewelry is no longer a the top of the holiday shopping list, and there is a lot more competition in the industry than before. The same thing is happening to luxury handbags.

This is besides the fact that young people are increasingly going for the cheaper and more functional over the traditionally cool.

Its shares were up nearly 2% in pre-market trading on Friday. They've lost 18% of their value over the past year.

(Reuters editing by Kirti Pandey)