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Licensing Decline Hampers Kenneth Cole

Kenneth Cole Productions Inc. posted a 6.7 percent profit gain in the fourth quarter as sales rose 1.5 percent.

Kenneth Cole Productions Inc. posted a 6.7 percent profit gain in the fourth quarter as sales rose 1.5 percent.

The company’s earnings rose to $8 million, or 39 cents a diluted share, from $7.5 million, or 37 cents a diluted share, for the same period a year ago. Total revenues for the fourth quarter inched up to $135 million from $133 million a year ago.

The company said there was a decline in licensing revenues as a percentage of the company’s total sales mix during the fourth quarter. There was also a decrease in wholesale gross margins during the quarter, which pulled the total gross margins rate down to 45.5 percent from 46.8 percent the prior year.

For the year-end period, the company’s earnings dropped 20 percent to $26.8 million, or $1.31 per diluted share, from $33.5 million, or $1.65 per diluted share, in the prior year. Year-end revenues were up 3.6 percent to $536.5 million from $518 million a year ago.

“While we are pleased that we were able to achieve our financial plan, increase our operating margin and further enhance our brands, we recognize that much work remains to be done. We look forward to achieving continued future progress with a stronger and more experienced management team than ever before,”said Kenneth Cole, chairman and chief executive officer, in a statement.

By way of guidance for the first quarter of 2007, the company said earnings for the quarter are expected to be between 15 and 18 cents a diluted share. Sales for the quarter are anticipated to be in the range of $124 million to $128 million.

This story first appeared in the February 28, 2007 issue of WWD.  Subscribe Today.