SAN FRANCISCO — The addition of Kettle and strong organic snack sales boosted net sales and led to sharply higher earnings at Diamond Foods, Inc. in the second quarter. Net income in the quarter ended Jan. 31 was $19,720,000, equal to 90c per share on the common stock, up 119% from $8,814,000, or 53c per share, in the same period a year ago.

Net sales in the second quarter totaled $257,592,000, up 40% from $184,169,000. Diamond Foods said retail sales rose 63% during the second quarter, to $215,642,000 from $132,248,000. Snack sales during the second quarter increased 133% to $135,024,000, while culinary sales rose 7% to $68,144,000 and in-shell sales rose 15% to $12,474,000.

“We achieved double-digit organic sales growth in our snack portfolio due to securing key new distribution in the club, mass and drug channels,” said Michael J. Mendes, chairman, president and chief executive officer. “To support these new distribution gains, we plan to increase our advertising investment during the remainder of the year, which we believe will position our portfolio for continued growth in the future.”

Diamond Foods said Pop Secret popcorn achieved significant new distribution in the mass merchandise channel, while shelf space for Kettle Brand potato chips doubled in 1,000 mass merchandise stores and increased significantly in several grocery retailers. Additionally, the launch of Emerald Breakfast on the go! extended the brand’s footprint into the convenient breakfast category.

For the six months ended Jan. 31, net income at Diamond Foods was $33,934,000, or $1.55 per share, up 43% from $23,744,000, or $1.43 per share, in the same period a year ago. Net sales totaled $510,158,000, up 40% from $364,810,000.

Looking ahead to the remainder of fiscal 2011, Diamond Foods said it expects net sales of between $925 million and $950 million, up from earlier forecasts of $920 million to $945 million. The company also raised its non-GAAP earnings-per-share guidance 2c to a range of $2.45 to $2.51.