June 25 (Reuters) - Women's apparel retailer Christopher & Banks Corp (CBK.N) posted a surprise quarterly profit as lower expenses helped offset a sharp drop in sales, and said it expects second-quarter to remain challenging.

Christopher & Banks

"The economic environment continued to pressure sales, resulting in a comp decline of 24 percent and, while in line with our previous guidance, we are not satisfied with the top line sales result," Chief Executive Lorna Nagler said in a statement.

For the first quarter, the retailer, which operates stores through its wholly owned subsidiaries, earned $1.7 million, or 5 cents a share, compared with $11.3 million, or 32 cents a share, a year ago.

Sales fell 23 percent to $120.4 million.

Analysts on average were expecting a loss of 5 cents a share, before items, on revenue of $123.2 million, according to Reuters Estimates.

Selling, general and administrative expenses fell 17 percent to $36.1 million in the quarter, the company said.

The company, which anticipates same-store sales trend in the second quarter to be similar to the first quarter, said it continues to plan conservatively for fiscal 2010.

The Plymouth, Minnesota-based retailer, which expects to be cash flow positive for the current fiscal year, forecast total gross margin in the second quarter to fall 500 basis points, hurt by deleveraging of fixed costs.

Shares of the company closed at $5.50 Wednesday 24 June on the New York Stock Exchange.

For related alerts double click (Reporting by Renju Jose in Bangalore; Editing by Kavita Chandran)