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Bad news for the entire luxury retail sector from Tiffany & Co. (TIF) yesterday in the company’s update of holiday sales.

I’d look to cut my short-term exposure to the sector—and that includes shares of companies such as Coach (COH) that aren’t luxury retailers in the United States, but are in their fastest growing market, China.

As of today, January 11, I’m selling Coach out of my Jubak’s Picks portfolio with a gain of 80.47% since I added it to the portfolio on November 20, 2009.

At Tiffany, same-store sales in the first two months of the fourth quarter—adjusted for currency—fell by 4% in Europe and grew by a meager 2% in North America. That compares to 6% growth in Europe and 15% in North America in the third quarter.

Disappointing, but nothing unexpected, in sales numbers from these two regions. Sales growth had been expected to slow, and sales in Europe had been expected to decline.

The surprise—and the reason I’d lighten up on the whole sector right now—came from Asia. Sales growth (in Asia outside of Japan) dropped to 12% from 36% growth in the third quarter. That was significantly below analyst expectations of a drop to 20% growth.

The 36% growth rate in the third quarter was itself down from 41% year-over-year growth in the second quarter. And Tiffany reduced its earnings forecast for 2012 to $3.60 to $3.65, from a previous forecast of $3.70 to $3.80.

Now, Coach isn’t Tiffany in a number of important ways. It sells at a different price point, and it sells a different mix of products.

And judging from reports from other retailers, handbags and accessories—Coach’s core products (handbags made up 63% of sales in the 2011 fiscal year ended in July, and accessories 27%)—have sold better than categories such as apparel during this holiday season.

But China is one of Coach’s key drivers for growth. The company has pushed its share of China’s handbag market up to 6% and increased its square footage in China by 61% in fiscal 2011.

I think this all leaves Coach vulnerable to the same trends that have hurt Tiffany. In the long term, I think Coach is a great play on the growth of the global middle class in general and China’s middle class in particular—which is why I’d leave it in a long-term portfolio such as my five-year Jubak Picks 50.

In shorter-term portfolios, such as my 12 to 18 month Jubak’s Picks portfolio, I’d sell Coach now and look to pick it up again later in 2012 at a lower price.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. Coach is a member of my Jubak’s Picks portfolio The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Coach as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio here.