Store closings and severance charges, including those to its former chief executive officer, contributed to a first-quarter loss at Kenneth Cole Productions Inc.
The firm said Wednesday that, for the three months ended March 31, the loss was $17.2 million, or 94 cents a diluted share, against earnings of $1.8 million, or 10 cents, in the year-ago quarter. Store closings and severance charges for the current quarter were $16 million, partially offset by $3.5 million in deferred rent income.
Analysts were expecting a loss of 21 cents a share, according to Yahoo Finance.
Revenues rose 7.3 percent to $117.5 million from $109.5 million. Same-store sales rose 2.7 percent, but consumer direct revenues fell 10.2 percent to $33.2 million while wholesale volume rose 19.3 percent to $74.5 million.
Jill Granoff stepped down as ceo of the company on Feb. 28. According to a regulatory filing with the Securities and Exchange Commission, under the terms of her employment contract she will receive cash payments of about $3.7 million.
Kenneth Cole, chairman, interim ceo and chief creative officer, told Wall Street analysts on a conference call that the firm was not pleased with the results, but is taking the necessary steps for growth and profitability.
He also told analysts the company took higher than typical markdowns to move excess inventory, and expects “inventories to be at appropriate levels by the end of June.”
Paul Blum, vice chairman, said the management team is “collaborating on a concise strategy to take advantage of the many opportunities in front of the organization,” but that it’s too early to elaborate on the specifics.
The company expects second-quarter earnings of between 2 cents and 4 cents a share. In addition, it expects to remain in clearance and liquidation mode during the second quarter.
Shares fell 74 cents, or 5.4 percent, to $12.86 in New York Stock Exchange trading Wednesday.
Separately Wednesday, Bernard Chaus Inc. said that a subsidiary of China Ting Group Holdings Ltd., its exclusive supplier of merchandise purchased in Asia, had acquired 3 million shares of the company’s common stock for $300,000, or 10 cents a share.
The China Ting stake represents half of the 6 million shares sold by Kenneth Cole back to Chaus after Chaus’s license to produce Kenneth Cole sportswear was terminated in October.
The remainder of the shares were purchased by Camuto Group in February, at which time Chaus said that Camuto “and another party with whom the company has a commercial relationship” had expressed interest in the stock.
Cole had paid $1 a share for the Chaus stock in 2005 and sold it back at 10 cents a share. The price paid by Camuto wasn’t disclosed.
Shares of Chaus closed unchanged Wednesday at 16 cents.
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