Apparel producer Kellwood Company saw profits move up despite falling sales in the second quarter, the company said.

Net sales in the second quarter ending 29 July were US$474.5m, compared to $488.2m last year, but net earnings were up from $6m to $9.1m.

Kellwood said this was caused by an increase in gross profit as a percentage of sales, tighter expense control and higher interest income. However, women's sportswear sales were down 4% and men's and other soft goods were flat.

The company's first-half sales were down from $1.04bn to $991.3m, with net earnings falling from $21.1m to $14.2m.

"We continue to believe that the new team and business processes we put in place last fall will result in improved product performance at retail this Fall and beyond," said chairman, president and CEO Robert C Skinner Jr.

"As we begin the Fall 2006 retail season, we are pleased that our inventory levels at retail and at wholesale look to be at reasonable levels."

The company now expects net sales of about $520m in the third quarter, with net earnings of about $18m. Full-year net sales are projected at $1.97bn, with net earnings at $45m.