Kenneth Cole Productions Inc. widened its fourth-quarter loss, partly because of a reduction in gross margin during the period that included the holiday season.
This story first appeared in the March 4, 2009 issue of WWD. Subscribe Today.
For the three months ended Dec. 31, the loss grew to $12 million, or 67 cents a diluted share, from $3.1 million, or 16 cents, in the year-ago quarter. Stripping out charges for asset impairment, investment write-downs and severance, the loss was 27 cents a share, 5 cents less than analysts’ consensus estimate. Total revenues fell 4.2 percent to $126.6 million from $132.1 million. Included in revenues was a 3.9 percent decline in sales to $114.9 million from $119.6 million and a comparable-store sales decrease of 10.7 percent.
Kenneth Cole said it “proactively converted inventory to cash during the peak holiday shopping season to increase liquidity.” However, that also meant a reduction in gross margins during the quarter, which fell to 42 percent of sales from 50.3 percent a year ago.
The company’s cost-cutting initiatives since last year have resulted in $20 million in annualized savings. Chief executive officer Jill Granoff said most of the recent reductions “are part of a comprehensive plan to create a more efficient and effective company that will drive increased value to our consumers, our partners, our customers and our shareholders.”
Chairman Kenneth Cole said, “Our new organization will be leaner and more responsive to ensure we are a viable, vibrant company regardless of the external environment.”
For the year, the loss was $14.8 million, or 80 cents, against net income of $7.1 million, or 35 cents, in 2007. Total revenues fell 3.6 percent to $492.3 million from $510.7 million.
Separately, the company’s board suspended the quarterly dividend to “preserve and manage liquidity.”
The firm’s shares closed at $5.84, down 6 cents or 1 percent, Tuesday before the earnings announcement.