NEW YORK — Kenneth Cole Productions Inc. continued to celebrate its 20th birthday in style as solid top-line growth and one-time charges in the prior-year period allowed third-quarter profits to surge by half.
For the three months ended Sept. 30, the New York-based company said net income advanced 47.8 percent to $10 million, or 49 cents a diluted share, which beat the Wall Street estimate by 1 cent. That compares with last year’s earnings of $6.8 million, or 33 cents. Excluding nonrecurring aftertax items accruing to 11 cents, year-ago earnings would have been 44 cents.
KCP, which markets footwear, handbags and accessories and licenses men’s and women’s apparel, said net revenues for the quarter improved 6.9 percent to $132.1 million from $123.5 million a year ago. Of that, net sales increased 5.1 percent to $121.2 million from $115.3 million last year, and licensing revenue jumped by nearly a third, or 32.8 percent, to $10.9 million from $8.2 million a year ago.
“With a pickup in our comparable-store sales trend and three new stores opening in the fourth quarter, we are pleased with the direction of our consumer direct division,” said president Paul Blum in a statement. “Additionally, we are enthusiastic that continued strong results from our licensed products, particularly for our women’s lines and the new fragrance, Black by Kenneth Cole, are indications that our brands continue to realize an excellent response from consumers.”
By channel, wholesale revenues grew 4 percent to $79.1 million versus $76 million a year ago. KCP noted that it achieved that growth despite its repositioning of the firm’s handbag business. In retail, new stores and a 2.2 percent rise in same-store sales pushed the consumer direct channel’s revenues up 7.1 percent to $42.1 million from $39.3 million last year.
Earnings were released after the markets closed Wednesday, but KCP’s shares added 42 cents, or 1.4 percent, to close at $30.88 in New York Stock Exchange trading earlier in the day.
The dollar’s weakness against the euro depressed gross margin by 30 basis points to 43.6 percent of sales, but that was partially offset by a 10 basis-point reduction in selling, general and administrative costs to 31.7 percent of sales. KCP added that last year’s gross margin also benefited from a $860,000 one-time gain related to audits of the company’s licenses.Overall, for the first nine months of the year, KCP posted a 27.7 percent gain in net income to $22.5 million, or $1.10 a diluted share, from $17.7 million, or 86 cents, last year. Net revenues for the period increased 7.4 percent to $339.1 million from $315.7 million a year ago.
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