* Q1 comp sales down 3 pct vs est 1.1 pct rise
* Sales $899.6 mln vs est $913.71 mln
* Adj EPS 72 cents vs est 70 cents-analysts
* Shares fall nearly 10 pct (Adds details, updates shares)
By Gayathree Ganesan
May 24 (Reuters) - Tiffany & Co reported a surprise drop in comparable sales, underscoring the upscale jeweler's struggles with weak demand at home and a strong dollar that has crimped spending by tourists.
The company's shares slumped nearly 10 percent to $84.15 in morning trading on Wednesday.
Tiffany, whose one-of-a-kind pieces are a regular feature on Hollywood red carpets, has been struggling to attract young shoppers, who are either spending less on accessories or are turning to chic brands such as Pandora A/S, and Alex and Ani.
The company has responded by rapidly launching gold and silver fashion jewelry to lure millennials to its stores. Sales of such jewelry represented about 33 percent of sales in 2016.
In January, Tiffany hired former Coach Inc creative director Reed Krakoff as its first chief artistic officer and named pop star Lady Gaga as the face of its fashion jewelry collection, Tiffany Hardware.
However, comparable store sales in the Americas, which account for nearly half of Tiffany's total revenue, fell 4 percent in the first quarter ended April 30, while analysts polled by Consensus Metrix expected a 0.5 percent drop.
Tiffany remains in a turnaround mode, ConsumerEdge research analysts wrote in a note.
Limited new fashion (the Hardware collection) arrived late but most of the Reed Krakoff gifts aren't expected until the fourth quarter, the analysts said.
A strong dollar also chipped away at the company's sales.
Tourist spending accounts for about 20 percent of Tiffany's U.S. sales and nearly 40 percent of sales at its flagship 5th Avenue store.
"The Americas comp is likely volatile given changes in tourism flow ...," Cowen analyst Oliver Chen said.
Tiffany ousted CEO Frederic Cumenal and struck a surprise deal with activist shareholder JANA Partners in February to add three directors to its board.
Worldwide sales at stores established for more than a year fell 3 percent for the sixth straight quarter, compared with a 1.1 percent rise expected by Consensus Metrix.
The company also blamed dwindling Chinese visitors to Hong Kong and Japan for the dip in comparable sales.
More Chinese are preferring to stay at home amid rising worries over slowing economic growth. China's economy grew 6.7 percent last year, according to the government, the slowest pace in 26 years.
Excluding a tax benefit of 2 cents per share, Tiffany earned 72 cents, beating the average analyst estimate of 70 cents, according to Thomson Reuters I/B/E/S.
Net sales rose marginally to $899.6 million in the first quarter, but missed analysts' average estimate of $913.71 million. (Reporting by Gayathree Ganesan in Bengaluru; Editing by Martina D'Couto and Sriraj Kalluvila)