Footwear group Steven Madden Ltd has paid for its store expansions and compliance with tougher accounting rules with a dip in profit for the first quarter of 2005.

The company - which still managed to beat Wall Street predictions - said first-quarter net income totalled $1.0 million compared to $4.1m in the first quarter of last year.

Net sales for the quarter rose 5.8 per cent to $83.3m from $78.8m a year ago.

Revenues from the wholesale business, comprised of the company's seven brands, increased 3.3 per cent to $56.9m from $55.1m in the same period of 2004, reflecting strong sales in Steve Madden Womens and Steve Madden Mens as well as growth in Candie's and Unionbay.

Retail revenues for the quarter increased 11.7 per cent to $26.5m from $23.7m in last year's first quarter, while same-store sales increased 5.5 per cent on top of an increase of 8.0 per cent in the prior-year period.

During the quarter, the company opened three Steve Madden stores and closed two underperforming Shoe Biz outlet stores to increase the Company's total number of stores to 92, including its internet store, compared to 83 locations in the same period last year.

Richard Olicker, president and chief operating officer, said; "During the quarter, we diligently worked to make progress in key areas of our operations. As expected at the end of fiscal 2004, we experienced continued gross margin pressure and higher operating expenses related to professional fees and costs to support the growing business."

Steven Madden Ltd designs and markets fashion-forward footwear for women, men and children which it sells through Steve Madden retail stores, department stores, apparel and footwear specialty stores, and online.