Luxury jewelry retailer Tiffany ( TIF) reported a sharp decline in fourth-quarter earnings as sales and operating margins declined.

Tiffany earned $31.1 million, or 25 cents a share, in the fourth quarter, compared with $127.4 million, or 96 cents a share, a year earlier. The latest quarter included a pretax charge of $97.8 million, or 47 cents a share, from an early retirement program and other staffing cuts.

Excluding charges, Tiffany earned 85 cents a share in the quarter. Analysts surveyed by Thomson Reuters expected the retailer to earn 80 cents a share.

Sales in the fourth quarter fell 20% to $841.2 million. In the Americas, fourth-quarter sales fell 29% to $458.9 million, while comparable U.S. store sales tumbled 33%.

Operating margin in the fourth quarter was 7.3% compared with 18.8% a year earlier.

"Tiffany has clearly not been immune from global economic turmoil in recent months and we are taking a cautious view to business conditions in 2009," said Michael Kowalski, chairman and CEO.

Tiffany said it expects worldwide sales for the next fiscal year to fall 11%, with net earnings from continuing operations of $1.50 to $1.60 a share. Analysts expect earnings of $1.66 a share.