KENNETH COLE PRODUCTIONS 
By NEW YORK, March 1, 2012 /PRNewswire/ -- Kenneth Cole Productions, Inc. (NYSE: KCP) today reported financial results for the fourth quarter and full year ended December 31, 2011.
(Logo: http://photos.prnewswire.com/prnh/20111101/MM98089LOGO )
For the full year revenues increased 4.7% to $478.9 million, gross margins were down 410 basis points, and selling, general and administrative expenses as a percentage of revenues decreased 460 basis points. The Company reported a loss of $(2.9) million for the full year, or $(0.16) per share, compared to a profit of $2.1 million or $0.11 per fully diluted share in 2010.
For the fourth quarter, net revenues increased 8.6% to $131.2 million versus $120.8 million in the fourth quarter last year. Wholesale revenues were up 47% to $62.3 million versus the year-ago period. Over 75% of the revenue increase was driven by the inclusion of non-comp Kenneth Cole New York women's sportswear in Wholesale, increased doors in Reaction men's sportswear and a one-time special holiday handbag program. Consumer Direct revenues decreased 16.6% to $54.7 million versus the year-ago period due to the closing earlier in the year of several unproductive full-priced stores and a comparable store sales decline of 5.0%. Licensing revenues in the fourth quarter improved approximately 10% to $14.2 million versus $12.9 million in the year-ago period, driven primarily by higher than anticipated inventory purchases by one international licensee.
Gross margin declined 230 basis points to 41.2% in the fourth quarter compared to 43.5% in the year ago period. This resulted primarily from the combination of higher sourcing costs and a mix shift in revenues toward Wholesale.
Selling, general and administrative expenses, which do not include one-time charges in each fourth quarter, improved 680 basis points to 33.8% from 40.6% in the year ago period. This improvement was primarily the result of the elimination of overhead related to unproductive stores closed in the first quarter of 2011 and leverage achieved on Wholesale growth.
Net income on a GAAP basis for the fourth quarter was $8.0 million, or $0.43 per fully diluted share versus a loss of $2.7 million, or $(0.15) in the year ago period. The Company noted that due to losses in prior years it did not provide for any federal income taxes in its earnings per share calculation.
The Company ended the year with $58 million in cash and no long-term debt. Inventory increased 12.2% to $42.2 million versus the prior year's level of $37.7 million.
In addition, the Company repurchased 107,627 shares of its stock for approximately $1.1 million during the quarter. The company has subsequently suspended activity under the repurchase program.
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; Unlisted; and Le Tigre, 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.
Kenneth Cole Productions, Inc.
(In
thousands,
except Quarter Ended Year Ended
------------- ----------
per share
&
outstanding
share
amounts)
12/31/11 12/31/10 12/31/11 12/31/10
-------- -------- -------- --------
Net sales $117,034 $107,878 $432,606 $411,652
Royalty
Revenue 14,177 12,929 46,338 45,676
------ ------ ------ ------
Net
revenues $131,211 $120,807 $478,944 $457,328
======== ======== ======== ========
Gross
profit 54,062 52,500 185,441 195,863
Selling,
gen'l &
administrative
expenses 44,301 49,077 173,163 186,498
Store
closings,
severance,
impairment
of
intangible
and
long-
lived
assets 1,124 6,316 13,771 7,885
Total
operating
expense 45,425 55,393 186,934 194,383
Operating
income/
(loss) 8,637 (2,893) (1,493) 1,480
Interest
& other
(loss)/income,
net (277) 61 (113) 326
Investment
gains/
(impairments) - 677 (405) 1,174
Income/
(loss)
before
taxes 8,360 (2,155) (2,011) 2,980
Provision
for
income
taxes 410 550 904 896
--- --- --- ---
Net
income/
(loss) $7,950 $(2,705) $(2,915) $2,084
====== ======= ======= ======
Net
income/
(loss)
per
share:
Basic $0.44 $(0.15) $(0.16) $0.11
===== ====== ====== =====
Net
income/
(loss)
per
share:
Diluted $0.43 $(0.15) $(0.16) $0.11
===== ====== ====== =====
Average
shares
outstanding:
Basic 18,116,000 18,223,000 18,211,000 18,169,000
Average
shares
outstanding:
Diluted 18,437,000 18,223,000 18,211,000 18,533,000
Balance
Sheet
Data: 12/31/11 12/31/10
------- -------- --------
Cash &
Cash
Equivalents $58,043 $83,395
Accounts
Receivable 45,564 34,660
Inventory 42,249 37,658
Total
Assets 249,818 262,969
Working
Capital 92,302 100,286
Accounts
Payable
&
Accrued
Expenses 46,435 43,608
Long-
term
Debt - -
Total
Shareholders'
Equity 143,866 146,735
SOURCE Kenneth Cole Productions, Inc.
