NEW YORK — Vigorous revenue growth boosted the bottom line as Kenneth Cole Productions Inc. produced substantial earnings and sales gains in the second quarter of fiscal 2002.

For the three months ended June 30, the New York-based footwear, apparel and accessories marketer reported net income swelled by more than a third, gaining 36 percent to $5.4 million, or 26 cents a diluted share. That compares with last year’s profits of $4 million, or 19 cents. Earnings per share beat Wall Street forecasts by a penny and met the company’s own most recent revised guidance issued July 19. Previously, KCP had expected to earn 20 to 22 cents a share.

Total revenues for the period rose 11.9 percent to $99.3 million from $88.7 million a year ago.

KCP released its earnings after the close of the market Tuesday. In New York Stock Exchange trading earlier in the day, its shares closed off 10 cents, or 0.4 percent, at $26.80.

"Our brand and product diversification and cost-control measures have begun to pay off as evidenced by our better-than-expected second-quarter results," said chief executive officer Kenneth Cole in a statement. "Revenue growth was driven primarily through strength in our diffusion business and our profitability was enhanced by expense leverage. We also expect further improvement in our business as a result of a significant increase in marketing activity through the back half of the year."

Broken down by segment, KCP’s wholesale revenue increased 28.2 percent to $53.6 million from $41.8 million last year. Consumer direct sales tapered 3.2 percent to $39.6 million from $40.9 million in the year-ago period. Licensing revenue remained essentially flat with last year at $6 million, while comparable-store sales slumped 10.1 percent for the quarter.

Greater efficiency accrued to the bottom line as well. Despite the 11.9 percent spike in revenues, selling, general and administrative expenses grew a comparatively moderate 7.8 percent. As a percentage of revenues, SG&A improved 150 basis points to 38.1 percent compared with 39.6 percent last year.

Moreover, KCP’s consolidated inventories of $50.1 million as of June 30 were approximately flat with the year-ago level despite the sales increase. Wholesale inventories were down 3.7 percent to $27.3 million from $28.3 million last year, while consumer direct inventories dropped 11.5 percent on a per-square-foot basis.High revenues and lower expenses added up to a gross margin increase of 20 basis points to 46.4 percent of revenue as compared with 46.2 percent last year.

"Our business is trending in a positive direction," said president Paul Blum in a statement. "We are operating more efficiently and bringing better product to market."

Corporate attention is currently directed at the launches of boys’ apparel under the Reaction brand and the Kenneth Cole New York fragrance in September.

"The fragrance launch will include an aggressive national print and outdoor campaign as well as the company’s first-ever television advertising," Blum said.

Overall, for the first six months of the fiscal year, KCP reported net income expanded by more than a quarter, rising 28.1 percent to $10.9 million, or 53 cents a diluted share. That compares with last year’s earnings of $8.5 million, or 40 cents. Net revenue for the period ticked up 3.2 percent to $192.2 million from $186.1 million a year ago.

In guidance, KCP once again raised its outlook and now expects better third-quarter results. Given that the company’s wholesale backlog orders were up 34 percent at the end of the quarter, KCP now anticipates third-quarter EPS of 38 to 40 cents on revenues of $117 million to $122 million. Previously the company had forecast EPS of 35 to 37 cents on sales of $112 million to $117 million. KPC reaffirmed projected fourth-quarter EPS of 30 to 32 cents and total revenues of $103 million to $108 million.

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