--Kenneth Cole Productions Reports Second Quarter Results--
--Reports Q2 EPS of $0.03, in line with Expectations--
--Issues Q3 Guidance of 15% Revenue Growth and EPS of $0.29-$0.31--

 

 

New York, New York, August 03, 2011 / Thomson Reuters - Kenneth Cole Productions, Inc. (NYSE:  KCP) today reported financial results for the second quarter ended June 30, 2011. The Company reported operating income of $1.1 million, flat versus the year-ago quarter.  The Company reported net income per fully-diluted share of $0.03 in the second quarter versus of $0.05 in the year-ago period.  The Company noted that during the quarter it took an impairment charge of $0.02 per fully-diluted share against the value of its auction-rate securities.

 

Paul Blum, Chief Executive Officer, commented, "Although second quarter results were consistent with our short-term expectations, we are by no means satisfied and are dedicated to improving every aspect of our business. We are focused on creating great product, more effective marketing and improving the performance of our operating segments across the board."

 

Net revenues in the second quarter decreased 5.3% to $102.2 million versus the second quarter last year.   Wholesale revenues were flat at $52.0 million versus the year-ago period.  Consumer Direct revenues declined by 11.5% to $39.6 million versus the year-ago period, due to the closing of unproductive full-priced stores and a comparable store sales decline of 1.7%.  Licensing revenues in the second quarter declined to $10.6 million versus $11.1 million in the year-ago quarter.  Excluding royalties from a now terminated Le Tigre license, licensing revenues were up 4.5%.

 

Gross margin declined 310 basis points to 40.6% versus the second quarter last year.  This anticipated decline was driven by higher sourcing costs, increased promotion to clear inventory, and a shift in mix as Wholesale became a larger percentage of total sales.

 

SG&A, as a percentage of net revenues in the second quarter improved 310 basis points to 39.6% from 42.7% in the year-ago period.  The improvement was the result of an ongoing focus on cost efficiencies and the elimination of overhead related to closed, unproductive full-priced stores.

 

The Company's balance sheet remained strong at June 30, 2011 with $56 million in cash and no long-term debt.  Total inventory was $40.7 million versus the prior year's level of $35.2 million, in line with sales expectations.  The Company also noted that approximately $5.0 million of the increase was driven by inventory required to support the Company's sportswear initiative.

 

The Company noted that during the quarter, it repurchased 143,800 shares for approximately $1.7 million.  This leaves approximately 3 million shares available for repurchase under its existing authorization.

 

Kenneth Cole, Chairman and Chief Creative Officer, commented, "I am excited to have Paul Blum return to the Company as our new CEO. The Company has begun implementing a new strategic plan with a heightened focus on product, which has already begun to energize and mobilize the organization."

 

 

Third Quarter Guidance
The Company expects to report third quarter earnings per share on a GAAP basis of $0.29 - $0.31 versus the prior year level of $0.11 per share on revenue growth of approximately 15%.

 

About Kenneth Cole Productions, Inc.
Kenneth Cole Productions, Inc. designs, sources, and markets a broad range of footwear, handbags, apparel and accessories under the brand names Kenneth Cole New York; Kenneth Cole Reaction; and Unlisted, as well as footwear under the proprietary trademark Gentle Souls.  The Company has also granted a wide variety of third party licenses for the production of men's, women's and children's apparel as well as fragrances, watches, jewelry, eyewear, and several other accessory categories.  The Company's products are distributed through department stores, better specialty stores, company-owned retail stores and its e-commerce website.  Further information can be found at http://www.kennethcole.com/.

 

Forward Looking Statement Disclosure
The statements contained in this release, which are not historical facts, may be deemed to constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.  Actual future results might differ materially from those projected in such statements due to a number of risks and uncertainties, including but not limited to, demand and competition for the Company's products, the ability to enter into new product license agreements or to renew or replace existing product licensee agreements, changes in consumer preferences or fashion trends, delays in anticipated store openings, and changes in the Company's relationships with retailers, licensees, vendors and other resources.  The forward looking statements contained herein are also subject to other risks and uncertainties that are described in the Company's reports and registration statements filed with the Securities and Exchange Commission.

 

Company Contact
David Edelman
Chief Financial Officer
Kenneth Cole Productions, Inc.
(212) 265-1500

 

Investor Relations Contact
James R. Palczynski
Principal
Integrated Corporate Relations, Inc.
(203) 682-8229 

 

 

 

 

 

Kenneth Cole Productions, Inc.
(unaudited)
       

(In thousands, exceptQuarter Ended  Six MonthsEnded
per share & outstanding share amounts)              
 06/30/11  06/30/10  06/30/11  06/30/10
               
Net sales $91,643   $96,888   $199,339   $196,281
               
Royalty Revenue 10,602   11,085   20,379   21,204
               
Net revenues $102,245   $107,973   $219,718   $217,485
               
Gross profit 41,496   47,188   83,167   92,738
               
Selling, gen'l & administrative expenses 40,441   46,092   86,746   90,672
Store closings & severance costs --   --   12,482   --
Total operating expense 40,441   46,092   99,228   90,672
               
Operating income/(loss) 1,055   1,096   (16,061)   2,066
               
Interest & other income, net 73   65   120   1,032
Investment impairment (376)   (48)   (376)   (68)
               
               
Income/(loss) before taxes 752   1,113   (16,317)   3,030
               
Provision for income taxes 173   176   306   261
               
Net income/(loss) $579   $937   $(16,623)   $2,769
               
               
Net income/(loss) per share:Basic $0.03   $0.05   $(0.91)   $0.15
               
Net income/(loss) per share:Diluted $0.03   $0.05   $(0.91)   $0.15
               
Average shares outstanding:Basic 18,296,000   18,146,000   18,268,000   18,119,000
               
Average shares outstanding:Diluted 18,581,000   18,517,000   18,268,000   18,501,000
               
Balance Sheet Data:06/30/11  06/30/10        
Cash & Cash Equivalents $56,247   $79,211        
Accounts Receivable 36,398   32,206        
Inventory 40,716   35,170        
Total Assets 246,077   255,846        
Working Capital 75,362   96,272        
Accounts Payable & Accrued Expenses 46,904   39,486        
Long-term Debt -   -      
Total Shareholders' Equity 130,537   145,806      
             
             
             
             

 

 



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Source: Kenneth Cole Productions Inc. via Thomson Reuters ONE
HUG#1535775

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