During its latest reported quarter, which ended July 31, the Tiffany posted a year-over-year same-store sales jump of 1% in Japan. The previous quarter had brought a drop of 10%. Tiffany executives had predicted a low-single-digit decline for the latest period, while Cowen analysts forecasted that they would fall 5%.

Cowen's survey might have evidence of why that turnaround took place. The survey tallied 570 Japanese consumers familiar with the retailer and found that Tiffany is the number one luxury brand that Japanese consumers expect to purchase this year. Respondents also said that the chain is the number one destination for bridal rings in the country.

Cowen analysts also attribute the promotion last year of former US Tiffany executive Michael Christ to president of the company's Japan division. With that move the retailer has increased marketing spending in the region, accelerated the rollout of new products and renovated stores.

Improvements in Japan could help the overall profitability of the company, the report says. Operating margins for this year are forecast at 25.7% in the international division, compared with 23.6% last year. "We believe expanding operating margin in theinternational division driven by an improving Japanese business…could propelTiffany to exceed overall peak margin level of 19.6% achieved in F2000," the report says.

In other news, Tiffany executives announced yesterday that they are opening a store next fall in the Macerich Co.'s La Encantada specialty center, in Tucson, AZ. Tiffany operates about 60 stores and 90 abroad, most of them in Japan. In September it opened new Japanese stores in Osaka and Yokohama.