American Apparel Inc is to speed up its retail expansion programme after posting a 42% increase in second quarter profits.

Sales for the period ended 30 June were up 38.9% to US$133m, with retail sales surging 58% to $81.3m.

Same-store sales were up 23%, while wholesale revenues increased 16.4% to $51.7m.

The clothing company said gross margin had gone up to 59.5% from 56.5% for the same period last year, mainly because of the increase in higher-margin retail and online consumer sales.

Operating income was up 29.4% to $15.6m, while net income soared 42% to $6.8m. Earnings per share were static at $0.10.

American Apparel chairman and CEO Dov Charney hailed "a year of significant growth" for the company.

"We are pleased with our financial performance for the second quarter, and believe we are only still laying the groundwork for a very successful future," he said.

American Apparel now expects to open 50-55 new stores during 2008, up from its previous plans of 40-45.

The company continues to expect full-year earnings per diluted share of $0.32-0.36, before adjustments.