DALLAS — Tracy Huffor and Michael Smith — partners in the fledgling Houston-based dress firm, Tracy & Michael — knew they were onto something when Neiman Marcus sold out of their flirty polkadot dress even before it appeared in the chain’s April magalog, “The Book.”

“We weren’t sure if anybody would like what we did,” said Smith over a lunch of pastis and steak tartar at Jeroboam, an upscale restaurant here. “But it’s expanding so much faster than we expected.”

Neiman’s sold 272 units of that $385 dress this spring and is still selling the black-and-white Fifties-style confection with a full petticoat. Spring 2003 was Tracy & Michael’s first season wholesaling, but the company already has dresses in 35 Neiman’s stores and merchandise on neimanmarcus.com. Furthermore, Tracy & Michael is negotiating with the department store to feature four styles in “The Book” this fall.

A source close to the company estimates it will exceed $2 million in sales this year.

“Their line is adorable and is what’s happening [in fashion],” said Amy O’Connor, vice president and divisional merchandise manager of Galleria dresses at Neiman Marcus. “[Their style] is a combination of late Fifties and early Sixties structure and [Tracy] has a real eye for detail and sophisticated prints. I’m wearing their cherry-print dress right now.”

Tracy & Michael offers well-crafted, classic silhouettes such as sleeveless sheaths, dance dresses with full skirts and strapless column gowns, for example.

“We focus not on retro but on classic, pretty clothes that have finish and detail, something that you can look back at in a photo,” Huffor said. “Simple clothing is more difficult to make. If a seam is off, you can’t hide it with a ruffle or frill.”

Bound seams and handtucked hems are standard features in all styles and Huffor noted they have paid contractors in New York and Houston to slow down production so they would sew more meticulously.

The pair, who are linked romantically as well as financially, launched the company on Sept. 1, 2001 as an appointment-only dress boutique in Houston. Despite the unfortunate timing, the salon thrived by offering upscale dresses in fine European fabrics with bound seams and other dressmaker details. Shoppers are offered champagne and all purchases are wrapped in tissue and nestled into glossy pink boxes tied with ecru double-faced silk satin ribbon.However, the designers said they are thinking about closing the shop to focus on the wholesale business. While the boutique has sold dresses for as much as $3,250, Tracy & Michael’s wholesale collections are priced lower to have broader appeal. Styles made mostly of domestic fabrics and blends run from $130 to $220 wholesale, while similar silhouettes in European fabrics are $175 to $450.

The couple finds inspiration for colors in nature and the fall collection features such fruit and earth tones as mango, apple green, bright red and terra-cotta. Fall fabrics include acetate and cotton moiré, embroidered polyester satin, cotton corduroy and wool and cashmere Donegal tweed and houndstooth.

Huffor and Smith, who both wore handmade clothing as children, credit their seamstress mothers with giving them an appreciation for elegant style and an insistence on quality craftsmanship.

“It ruins the retail experience because you spend so much time examining the garment on the inside,” Huffor added. “We both popped out of the womb saying, ‘Can you believe they don’t make it like they used to?’”

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