Tiffany & Co posted a lower-than-expected quarterly profit on Friday as shoppers avoided jewelry, but the upscale retailer kept its full-year forecast, citing a smaller sales decline so far in May.

High-end stores like Tiffany and even more-affordable peers such as Zale Corp have taken a painful blow to sales in the past year as consumers confine their shopping to necessities in the recession.

Tiffany's net profit fell to $24.3 million, or 20 cents per share, in the first quarter ended on April 30 from $64.4 million, or 50 cents per share, a year earlier.

Analysts on average expected earnings of 21 cents per share according to Reuters Estimates.

Sales dropped 22 percent to $523.1 million. On a constant currency basis, sales fell 18 percent.

Tiffany continues to expect full-year per-share earnings of $1.50 to $1.60 from continuing operations, and a worldwide sales decline of about 11 percent.

Analysts expect a profit of $1.57 per share.

Despite the rough economy, Tiffany had vowed earlier this year to maintain pricing on its jewelry, as many believe discounting would tarnish its brand in the long term.

Earlier in May, Tiffany said it had bought bankrupt handbag maker Lambertson Truex in a bid to expand its array of leather goods.

(Reporting by Aarthi Sivaraman; Editing by Lisa Von Ahn)

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