Inventory discipline and across-the-board revenue gains allowed Kenneth Cole Productions Inc. to move to a first-quarter profit.

This story first appeared in the May 6, 2010 issue of WWD. Subscribe Today.

For the three months ended March 31, net income was $1.8 million, or 10 cents a diluted share, against a loss of $8.2 million, or 46 cents, in the year-ago quarter. Excluding a onetime gain from the sale of an investment, income was 5 cents a share, beating analysts’ estimates by 1 cent.

Total revenues rose 5.9 percent to $109.5 million from $103.4 million. Revenues included a 5.3 percent gain in sales to $99.4 million and a 12.4 percent increase in licensing and other revenue to $10.1 million. The sales gain included a 1.3 percent increase in wholesale volume to $62.4 million and a 13 percent jump in consumer direct revenues to $37 million. Same-store sales rose 5.6 percent.

For the quarter, the company said consolidated gross margin gained 770 basis points to 41.6 percent of sales from 33.9 percent in the 2009 period.

For the second quarter ending June 30, the firm expects revenues to grow between 7 and 10 percent with earnings per share of about 3 cents, compared with an 18-cent loss in last year’s period. The projections exceeded existing consensus estimates, helping to lift shares 0.9 percent to $13.13 in trading Wednesday.

Referring to the increases in wholesale, direct and licensing, Jill Granoff, chief executive officer, told Wall Street analysts on a conference call, “This is the first time in nearly five years that we have experienced growth in each of our business segments simultaneously.”

She said the firm’s operational streamlining has been effective: “We are lean and we intend to stay that way. We will also continue to exercise discipline with regard to our inventory and cash management to keep our balance sheet healthy.”

The company ended the quarter with no long-term debt and cash and cash equivalents of $66.3 million versus $46.3 million a year ago.

Granoff said in a phone interview that the firm’s merchandise mix in its stores is 55 percent men’s and 45 percent women’s, with apparel, accessories and footwear each accounting for about one-third of sales.

When Granoff joined the company two years ago, it embarked on a strategic plan emphasizing creating compelling product, energizing the brand and accelerating its retail operations.

“Following September 2008, when the world changed, we shifted our focus and looked at things like inventory and cash management and greater expense disciplines,” she told WWD. “In some ways it feels like we lost a year; in other ways we emerged stronger. It forced us to be strong and focus our priority on projects that will move the needle.”

While some items featured lower opening price points, the firm elected not to make any price changes for its higher-end merchandise offerings. It focused instead on pieces such as light gauge knit items and layering pieces, as well as product that could be worn multiple ways, such as a suit where the jacket could be worn with “jeans at night, or the slacks with a T-shirt,” Granoff said.

According to the ceo, each of the company’s more than 100 stores has counters to gauge traffic levels as the firm is also making a big push in capturing customer data at the point of sale for use in targeted e-mails to alert shoppers to special events and private sales. So far, traffic is still down slightly, but conversion is up. “Those that are making trips to the store are buying more and spending more. That is an encouraging sign,” she noted.

The company operated 110 stores at the end of 2009.

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