Markdowns of seasonal merchandise have been blamed for a halving of second quarter profit at branded footwear retailer DSW Inc.

For the three weeks to 4 August net income fell 57.5% to $6.5m from $15.3m in the same quarter last year, the Columbus, Ohio-based retailer said today (5 September).

Net sales rose 15.7% to $348.7m from $301.3m last time, and same store sales increased 5.9% for the period versus an increase of 2.2% last year.

The company said second quarter sales were driven by significant promotional activity aimed at clearing seasonal merchandise, which negatively impacted gross margin for the quarter.

Diluted earnings per share were $0.15 for the second quarter of 2007 compared with $0.35 for last year's second quarter.

For the six months period, net income slipped 7.9% to $30.3m from $32.9m, while sales rose14.2% to $705.7m from $32.9m. Same store sales increased 0.9%.

The company is maintaining its forecast for fiscal 2007 diluted earnings per share in the range of $1.63 to $1.68 and for same-store sales in the range of 0% to 3%.

It plans to open at least 35 new DSW stores during the year, an increase from its original estimate of at least 30 new stores.