Growth at retail and on the Internet helped Coldwater Creek shake off lower sales from its catalogues, and a difficult performance by women's specialty retailers in general, and post higher first quarter profits.

For the three months ended 5 May, the Sandpoint, Idaho-based multi-channel women's apparel specialty retailer posted net income of US$12m, or $0.13 a diluted share, 4% above the year-ago level of $11.6m, or $0.12. The EPS performance was more than 50% above the analyst consensus estimate of $0.08.

Net sales were up 30.7% to $281.3m from $215.3m, led by a 43.8% increase in retail sales, to $184.9m, and a 7.3% increase in same-store sales. The retail segment accounted for 65.7% of sales, up from 59.7% a year ago.

While Internet sales grew 18.5% to $65.8m, catalogue revenues dropped 1.7% to $30.6m. Catalogues accounted for 10.9% of sales in the 2007 quarter, versus 14.5% in the year-ago period.

Even with the increases in the top and bottom lines, gross margin fell to 45.7% of sales from 46.7% in the 2006 quarter. The company said that increased promotional activity offset higher merchandise margins created by direct sourcing initiatives.

"The net sales and earnings performance for the first quarter was a result of solid response to our spring merchandise in combination with effective cost control measures," commented Dennis Pence, chairman and CEO.

"We added new stores and gained additional market share during the period, despite the challenging traffic-related environment which continues to impact the women's specialty apparel sector."

Georgia Shonk-Simmons, president and chief merchandising officer, reported that retail inventory per square foot was "well below last year."

The company opened 12 "premium" stores during the quarter, bringing its door count to 252 versus 183 at the end of last year's quarter. The company also operates six spa stores and 25 outlets.
By Arnold J Karr.