SAN FRANCISCO — Exceptional growth from the Kettle and Emerald brands helped fuel a 40% increase in first-quarter net sales at Diamond Foods, Inc. Net income in the first quarter ended Oct. 31, though, fell 5% to $14,214,000, equal to 65c per share on the common stock, down from $14,930,000, or 90c per share, in the first quarter of fiscal 2010.

Net sales for the first quarter rose to $252,566,000 from $180,641,000, driven by a 58% gain in retail sales and a 130% gain in snack sales during the quarter. Non-retail sales fell 32% to $24.8 million during the quarter, primarily due to the later tree nut harvest, the company said.

Diamond Foods said Emerald’s dollar sales rose 32% during the 12-week period ended Oct. 30 in U.S. grocery stores, which compared with 6% growth in the overall category. Kettle sales, meanwhile, rose 11% compared with 4% for the category, while Pop Secret sales increased 4% compared with an 8% decline for the overall category.

“We are pleased with the organic growth in our base retail business, which has been augmented by the addition of Kettle,” said Michael J. Mendes, president and chief executive officer. “Our strong performance gives us the confidence to further invest in our brands while increasing our sales and earnings guidance.”

Diamond Foods said sales are being generated outside of grocery stores in non-scanned channels, and during the first quarter both Emerald and Pop Secret benefited from expanded distribution in the drug and mass channels.

Looking ahead, the company said several products, including single-serve Kettle Brand potato chips, Pop Secret Magic Colors, and Emerald Breakfast On the Go, have been authorized by customers and will begin shipping in the second quarter of fiscal 2011.

Diamond Foods said it expects sales of between $920 million and $945 million in fiscal 2011, up from earlier forecasts of between $910 million and $940 million. Non-GAAP earnings per share is expected to range from $2.43 to $2.49, up from $2.38 to $2.48 previously.