Coldwater Creek (NASDAQ:CWTR) had a tremendous 2004, but you can still return it for a refund if you like, or exchange it for something that will fit you a little better. With Coldwater's stock having doubled and then some over the past year, it's hard to argue that the company is cheap these days, despite the stellar financials.

The retailer, well known for its online and catalog business, saw earnings more than double in 2004 to hit $0.48 a share, while net sales rose by a more modest 13.8%.

The rapid bottom-line growth may make you wonder whether paying 45 times earnings for Coldwater is reasonable. But even so, you can't ignore the top line. Sure, having expanding margins is great, but there's a limit in retail to markups and operating efficiencies. That's why sales are so important.

Because it's been a direct seller for so long, Coldwater adapted early to the Internet and only recently began expanding its physical storefront presence. In other words, this is the rare retailer that's growing faster offline than online. On the bricks-and-mortar front, the company saw its 2004 sales grow by 52%, yet that was because the number of stores shot up from 66 to 114 over the year. Its online sales, by comparison, were up by just 9%.

That dot-com gain is a mere pittance when compared with a company like the much larger (NASDAQ:AMZN), which saw its sales grow by 31% in 2004. Or you can look to the more nimble Rule Breakers recommendation (NASDAQ:OSTK), which saw its last year sales volume climb by 107%.

Coldwater's original catalog business was down by 25%, and that's worrisome because the company mailed out only 9% fewer catalogs this past fiscal year than it did the year before. Even if the company's new emphasis is on its full-line retail stores -- something that other catalog specialists like J. Jill (NASDAQ:JILL) are doing now that the mail-order well is going dry -- one has to couple Coldwater's waning catalog popularity and rather sluggish online results and conclude that the company deserves a more reasonable valuation, at least until we can see how sustainable its growth is at the mall level.

So, sure, keep an eye on Coldwater, but be careful about diving into this creek. If you think Coldwater's stock is about to cool off, you're getting warm.

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Longtime Fool contributor Rick Munarriz loves shopping by catalog -- as long as he can find a parking space. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.