NEW YORK — Solid sales and margins allowed Christopher & Banks Corp. to post more than a 20 percent increase in second-quarter profits.

The Minneapolis-based specialty retailer said for the three months ended Aug. 27 earnings rose 22.2 percent to $8.5 million, or 22 cents a diluted share, at the upper end of its previous guidance and 1 cent ahead of Wall Street’s consensus estimates. That compares favorably with earnings in the year-ago period of $6.9 million, or 17 cents. Sales for the quarter rose 21.5 percent to $89.7 million from $73.9 million, while comparable-store sales increased 3 percent.

“Despite the continued difficult retail environment, we were able to maintain strong merchandise margins through a disciplined approach to managing the business,” Bill Prange, chairman and chief executive, said on an afternoon conference call.

Joseph Pennington, president and chief operating officer, said on the call that while transactions per average store were down 2 percent, that’s an improvement from the 3 percent fall in the first quarter. He also said comps were aided by a small rise in the average dollar and average unit per transaction.

“We believe the decrease in transactions is due to a decrease in mall traffic, and I am happy to see we are able to convert from a unit and dollar standpoint,” Pennington said.

Looking ahead, C&B, which operates a chain of 494 stores under the Christopher and Banks and C.J. Banks nameplates, said it was maintaining its view that earnings per share will increase at least 20 percent over the second half of the year, based on its outlook for a low-single digit comp increase for the rest of the year and a flat to modestly positive September comp.

“While we expect the retail environment will remain difficult for the foreseeable future, we are encouraged by our ability to continue to generate earnings increases during these challenging times,” Prange said in a statement. “Given the increasing visibility of our brands and our ability to manage our business efficiently, we believe we will be able to benefit from any improvement in general economic conditions.”

C&B said it increased its revolving credit facility with Wells Fargo Bank Minnesota N.A. to $40 million from $25 million, subject to inventory levels. It also negotiated a two-year extension to the credit facility with a new maturity date of June 30, 2006.For the first half of the year, earnings picked up 17.4 percent to $19.6 million, or 51 cents a diluted share, compared with income of $16.7 million, or 42 cents, in the like period last year. Sales for the six months improved 20.8 percent to $183.1 million from $151.6 million, and rose 1 percent on a comp basis.

“By maintaining a disciplined approach to managing our business, we increased our operating margin to 15.2 percent from 14.9 percent in the same period last year,” Prange said, adding that C&B’s inventory position at the end of the quarter was “fresh and current.”

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