"Strong sales at full-price, the continued success of our national retail store expansion and growth in the Internet channel have resulted in the most profitable second quarter in the company's history," said Dennis Pence, chairman and chief executive officer for Coldwater Creek.

Coldwater, which sells clothing via catalogue, Internet and branded stores, plans to boost its square footage by year-end with an additional 60 stores. In the quarter, the company opened 17 full-line retail stores during the quarter for a total of 136 full-line retail stores in operation, compared with 89 full-line retail stores at the end of 2004's second quarter.

Despite lagging catalog sales, which decreased 14% from last year to $20.6 million, Internet net sales increased 49% to $38.8 million from $26 million during the same period last year. Internet sales continue to supersede catalog sales in regard to overall earnings impact: Internet net sales represented 25.1% of the company's total net sales this quarter, compared with 23.3% last year. By contrast, catalog net sales represented 13.3% of the company's total net sales in the second quarter, compared with 21.6% in 2004.

Gross profit was $67.7 million, or 43.8% of net sales, compared with $46.8 million, or 42.1% of net sales 12 months prior. The company attributed the increase in the gross profit rate to improved merchandise margins on sales in all channels and, to a lesser extent, improved leveraging of the company's full-line retail store occupancy costs.

Net sales from the company's retail segment, which includes the company's full-line retail stores, resort stores and outlet stores, increased 55% to $95.2 million in the fiscal 2005 second quarter, from $61.3 million in the fiscal 2004 second quarter. Retail Segment net sales represented 61.6% of the company's total net sales, compared with 55.1% a year ago.

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