SANDPOINT, Idaho — Women's clothier Coldwater Creek for the first time topped the $1 billion mark in sales in 2006, but the chairman said profits need to improve.

The company, founded in 1984 as a mail-order retailer, has grown into a national brand with 239 stores in addition to its catalogs.

Chairman and Chief Executive Officer Dennis Pence said the company failed to meet sales expectations during the fourth quarter, which included the Christmas shopping season. While the company outperformed many of its peers, more clothing sold at clearance prices, reducing profitability, Pence told analysts during a conference call last week.

"One theory is that it was an electronic Christmas, that she (the customer) was more focused on the color of her iPod than the color of her apparel," Pence said.

Net income for the company's fourth quarter ended Feb. 3 was $15.9 million, or 17 cents per share, down 3 percent from $16.4 million, or 17 cents per share, for the same period in 2006. Fourth-quarter sales increased 29.1 percent to $366.6 million, from $283.9 million in the fiscal 2005 fourth quarter.

Net income for the fiscal year was $55.4 million, or 59 cents per share, up 33.2 percent from $41.6 million, or 44 cents per share, for the previous period. Net sales increased 35.3 percent to $1.05 billion, from $779.7 million a year earlier.

Pence said Coldwater Creek plans to open 65 new stores this year, but will hold off on hiring that was previously planned at the company's corporate offices in Sandpoint.