Updated from 10:34 a.m. with additional details

Tiffany (TIF) - Get Report may have surprised Wall Street with its third-quarter earnings, but by no means has it gotten beyond several huge challenges that have been weighing on its performance. 

The high-end jeweler reported Tuesday that third-quarter net sales rose 1% year over year to $949 million, ahead of analysts' forecasts for $922.6 million. Propped up by a combination of stock repurchases and lower costs for gold and other metals, Tiffany's earnings came in at 76 cents a share, outpacing Wall Street forecasts of 68 cents.

The company surprisingly maintained its full-year sales and earnings outlooks despite global economic challenges weighing on demand for pricey jewelry and post-election Donald Trump related protests spilling out front of its iconic store on Fifth Avenue in New York. Tiffany sees worldwide sales falling by a low-single digit percentage, while are earnings are expected to decline by a mid-single digit percentage.

Shares of Tiffany were up 4.66% to $81.78 in mid-morning trading.

Investors, however, shouldn't be fooled into believing that Tiffany is out of hot water.  

In the Americas division, same-store sales dropped 2%, excluding the impact of the strong U.S. dollar. As in prior quarters, the strong dollar continues to impact tourist spending in major U.S. markets, such as New York City, where Tiffany has prominent stores on Fifth Avenue and Wall Street. The tepid traffic trend may become worse this holiday season due to the U.S. dollar's rally following Election Day. Spending by U.S.-based consumers continues to be weak, too.  

"An even stronger U.S. dollar, which has accelerated since early November and is now up about 4% year over year, is likely to bring renewed headwinds to luxury tourism spending in upcoming quarters," cautioned Oppenheimer analyst Brian Nagel. 

Meanwhile, same-store sales in Tiffany's Asia Pacific region plunged 7% on a constant currency basis in large part to continued declines in Hong Kong. Both a strong Hong Kong dollar and the Chinese government's anti-corruption crackdown on gift-giving for party officials remain headwinds to luxury goods players in the region. The lone bright spot in Asia for Tiffany was China, where sales rose by a double-digit percentage on the back of improving economic conditions. 

In Europe, same-store sales fell 7% on a constant currency basis as Tiffany was still plagued by weak demand in France by tourists and locals in the wake of prior terrorist incidents. 

"We are encouraged by some early signs of improvement in sales trends, but we clearly need more positive data over time before this can be considered an inflection point," conceded Tiffany CEO Frederic Cumenal,

As for Tiffany's well-known Fifth Avenue store, which is nearby to Trump Plaza and represents about 10% of worldwide sales, the company acknowledged Tuesday that sales have been hurt by protests.

"With respect to the impact of recent election-related activity near the company's New York flagship store, management has noted some adverse effect on traffic in that store and a continuation of sales softness relative to prior year and to the company's other U.S. stores this year," Tiffany said in a statement. The company declined to estimate the impact or how long it believes it will last.

"How can it not affect them?" asked Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm. "You can't go on the block sometimes - how are you going to go in the store?" Davidowitz has a birds-eye view of the kerfuffle as he's lived in Trump Tower for 22 years.

And since much of the luxury jewelry retailer's sales come during the holiday season, any disruption could hurt Tiffany's top and bottom lines.

"There's no question that the fourth quarter for Tiffany's is very important because of the gifting aspect of what they do," said Jim Leventhal, chief executive of Leventhal Asset Management.

Any hit to the flagship store's sales could "affect their earnings big-time," added Davidowitz.