Shares of Tiffany & Co. (TIF) are slumping this morning after the luxury retailer reported weaker-than-expected​ holiday sales. This is further evidence that the economic recovery may be starting to falter.

Tiffany reported that holiday revenue rose 7% to $952 million, fueled by double-digit gains in Asia along with smaller increases in Europe and the Americas. Same-store sales rose 4%, the New York-based company said.

"After achieving very strong and better-than-expected​ sales and earnings growth in the first three quarters of 2011, sales weakened markedly in the United States and Europe during the holiday season, reflecting restrained spending by consumers for fine jewelry,"  CEO Michael J. Kowalski said in a press release.

The company estimates earnings for the fiscal year ending January 31 will be $3.60 - $3.65 per share versus an earlier forecast $3.70 - $3.80 per share. This still surpasses a forecast made last March of $3.35 - $3.45 per share. Wall Street analysts expected earnings for the current fiscal year of $3.76 on revenue of $3.68 billion.

Weakness in spending by U.S. customers were offset by higher sales to tourists from outside the U.S. Internet and catalog sales in the Americas were 4% lower than last year. Sales in Europe increased 1% to $117 million, though same-store sales in the region fell 4%. Comparable sales in the Americas rose 2%.

"You are seeing more volatility in the financial markets," said Stifel Nicolaus & Co analyst David Schick in an interview with Bloomberg News. "It’s not confidence-inspiring​ for bigger-ticket spending. That tells you not to expect too much in the top line for Tiffany."

Tiffany joins Target (TGT), Kohl's (KSS) and J.C. Penney (JCP) in reporting that the holidays were less merry than many had expected despite heavy discounting. These companies all lowered their fourth quarter earnings outlooks, underscoring that both wealthy and middle class consumers remain uneasy about their financial futures though they are increasingly willing to tap their credit cards.

Jonathan Berr is a freelance business writer. He owns shares of Target.