Tiffany & Co reported a lower-than-expected quarterly profit on Monday as higher sales of lower-margin rough diamonds ate into overall margins. Shares fell 3.1 percent in premarket trading.

But the upscale jeweler forecast full-year profit from continuing operations of between $2.45 and $2.50 per share in 2010. Analysts had forecast earnings of $2.43, according to Thomson Reuters I/B/E/S.

Net income rose nearly fivefold to $140.4 million, or $1.10 per share, in the fourth quarter ended on January 31, 2010, from $31.1 million, or 25 cents per share, a year earlier.

Excluding one-time items, Tiffany's profit from continuing operations came to $1.09 per share, falling short of analysts' average forecast of $1.13.

Shares were down $2.25 at $45 in premarket trading.

(Reporting by Phil Wahba; Editing by Derek Caney)