Children's shoe company The Stride Rite Corporation has reported a 3 per cent fall in second-quarter sales, hampered by the transition of the Keds collection to an upscale lifestyle brand.

Second-quarter net sales fell 3 per cent to $159.6 million from $165.0m in the same quarter last year, while net income totalled $11.8m compared to $11.9m a year ago.

However, the company also reported an increase in net sales for the first six months of 2005, from $301.1m to $310.2m, with a 3 per cent rise in net income to $19.9m from $19.4m last year.

David Chamberlain, chairman and chief executive officer, said: "Keds sales were down 15 per cent for the quarter and 4 per cent for the six-month spring season, resulting primarily from our strategic decision to significantly reduce value channel and closeout business as we reposition the brand as higher-priced, with improved styling.

"We enjoyed solid success in the premium department and specialty stores, while the mid-tier channels had slower sales than anticipated as a result of higher pricing."

Chamberlain added that the company reiterates its 2005 full-year guidance of 3-5 per cent growth in sales and 5-10 per cent growth in earnings."

The Stride Rite Corporation's brands include Baby Smart, Grasshoppers, Keds, Munchkin, PRO-Keds, Sperry, Sperry Top-Sider, and Stride Rite.