August 3 - Steve Madden's quarterly profit beat Wall Street expectations as its fashionable pumps and boots appealed to customers, encouraging the shoe retailer to raise its full-year forecast.

The company has seen strong demand for its flagship Steve Madden brand, which has spurred market-topping sales for more than two years.

The company, founded by Steve Madden in 1990 with $1,100 in his bank account, recently bought privately held Topline Corp for $55 million in cash, in a bid to bolster its private label footwear business.

The Steve Madden women's Sneak Peek collection

The move, however, has pressured gross margins as the company, which also sells the Stevies and Candies brands, shifts its sales model and sells private labels at discounters like Target Corp .

Gross margins fell to 40.2 percent for the quarter, compared with 43.4 percent, a year ago.

The company, known for its chunky heels, now expects to earn $2.15-$2.20 a share this year, up from its prior view of $2.03-$2.10 a share. For 2011, the retailer expects net sales to increase 47-49 percent.

Analysts, on average, were expecting a profit of $2.15 a share, according to Thomson Reuters I/B/E/S.

Net income for the quarter rose to $23.8 million, or 55 cents a share, from $19.8 million, or 47 cents a share, a year ago.

Revenue rose 31.8 percent to $209.2 million.

Analysts had expected earnings of 54 cents a share on revenue of $194.4 million for the period.

Shares of the Long Island City, New York-based company closed at $39.45 on Monday on Nasdaq.

(Reporting by Meenakshi Iyer in Bangalore; Editing by Saumyadeb Chakrabarty)