Coldwater Creek, Inc. (CWTR: chart), a retailer of women’s apparel, accessories and jewelry, announced Q1 earnings of 12 cents a share compared to 9 cents a share in the year-earlier period. The net income for the quarter was up 36% to $11.6 million compared to $8.5 million. Analysts had expected earnings of only 11 cents a share. Net sales for Q1 increased 38.3% to $215.3 million from $155.6 million in the year ago period.

Gross profit for the quarter was 47% at $101.3 million of net sales in comparison to $72.8 million in the year-ago period. The increase is accredited to improved leveraging of the company’s retail store occupancy costs as well as improved merchandise margins in both retail and direct segments.

Selling, general and administrative expenses were up 38.9% of sales at $83.8 million in comparison to 38.2% of sales at $59.5 million a year ago. The increase was primarily due to personnel costs associated with the company’s retail expansion and an increased national magazine advertising. The increase was partially offset by a decrease in catalog expenses as the company continues its retail expansion.

Income from operations increased $ 4.2 million at 31.1% to $17.5 million which is 8.1% of sales, in comparison to 8.6% or $13.4 million a year ago.

Net retail sales increased 53.5% to $128.6 million from $83.8 million last year. Retail net sales represented 59.7% of the company’s total net sales in Q1, compared to 53.8% a year ago. The company opened 9 premium retail stores during the quarter for a total of 183 premium retail stores in operation.

Combined direct sales, which include catalog and internet sales, increased 20.7% to $86.7 million, up from $71.9 million last year. Direct sales represented 40.3% of the company’s total net sales, compared with 46.2% in the year-earlier period.

The company also announced that it would restate its 2005 Q1 financial statements to correct the manner in which it accounts for non-refundable marketing fees from its credit card issuer in conjunction with its co-branded credit card program. These fees, which were previously disclosed in prior SEC filings, were recognized as revenue during the period in which the customer’s card was issued and activated.