Upscale jeweler Tiffany & Co posted a higher-than-expected quarterly profit on Friday as it squeezed out costs and saw a modest improvement in demand for its pricey baubles.

The company, which reduced selling, general and administrative expenses by 14 percent in the quarter, said it is pursuing a more modest pace of store expansion this year, citing economic conditions.

Tiffany's net profit fell to $56.8 million, or 46 cents a share, for the second quarter ended July 31, from $80.8 million, or 63 cents a share, a year earlier.

Excluding items, the profit per share was 39 cents, beating analysts' average forecast of 33 cents a share, according to Reuters Estimates.

Net sales fell 16 percent to $612.5 million. Analysts on average had expected $604.9 million, according to Reuters Estimates.

Tiffany shares were up 7 percent at $36.33 in premarket trade.

(Reporting by Dhanya Skariachan, editing by Gerald E. McCormick)