Higher same-store sales, better margins and lower expenses have helped outdoor clothing and accessories retailer Eddie Bauer Holdings Inc slash its second quarter losses.

Net loss for the quarter was $0.1m, or approximately breakeven on a per share basis, compared to a net loss of $22.2m, or $0.73 per diluted share, in the same period last year.

The improvement was driven by a $10.3m increase in operating income to $0.2m, from an operating loss of $10.1m last time and a $6.5m higher income tax benefit, the company said.

Selling, general and administrative (SG&A) expenses were down $4m as the company outsourced fewer professional services, and cut its marketing, advertising and promotion costs.

Total revenues for the three month period rose 2.6% to $233.0m from $227.0m.

Net merchandise sales were up 3.8% $220.9m, led by a 6.2% rise in sales at retail and outlet stores to $160.7m.

Sales from the direct channel, which includes its catalogues and website, fell 2.1% in the quarter to $60.2m.

Shipping revenues were down 4.2% to $8.5m, licensing royalty revenues fell 22.9% to $2.7m, and royalty revenues from foreign joint ventures dropped 47% to $0.8m.

Total same-store sales rose 8.6%, led by retail store sales up 11.2%, and a 4.3% rise in outlet store sales.

Sales from the direct channel, which includes its catalogues and website, fell 2.1% in the quarter to $60.2m.

Gross margin percentage increased to 37.9%, compared to 35.4% for the year-ago period.

"Overall, this was a good quarter for Eddie Bauer, particularly in light of the tough economic and retail climate," said Neil Fiske, chief executive officer.

However, he added that "the external environment for the remainder of 2008 requires caution."

The company operates 371 stores, consisting of 252 retail stores and 119 outlet stores.