The launch of Reaction men’s sportswear, coupled with double-digit growth in its footwear business, drove Kenneth Cole Productions to improved third-quarter earnings that beat analysts’ estimates by 1 cent.
For the three months ended Sept. 30, income was $2 million, or 11 cents, compared with $186,000, or 1 cent, in last year’s quarter. Wall Street expected EPS of 10 cents, according to Yahoo Finance. Revenues rose 14.7 percent to $119 million from $103.8 million, which included a 15.2 percent sales gain to $107.5 million from $93.3 million.
Wholesale sales climbed 21 percent to $62.5 million, propelled by the launch of Reaction men’s sportswear and double-digit growth in men’s and women’s footwear. The consumer direct business increased 8 percent to $45 million, and comparable-store sales rose 6.7 percent. The balance of Kenneth Cole’s revenue was from licensing income, which climbed 10.8 percent to $11.5 million.
Gross margin declined to 42.5 percent of revenues from 43.3 percent in the 2009 period, as the firm said it weathered a “moderate increase” in promotional activity in its outlet stores and saw its sales mix lean more heavily toward wholesale volume.
Jill Granoff, chief executive officer, told analysts during a conference call Thursday that the company registered its fifth consecutive quarter of positive operating income. “We continue to demonstrate steady, sustained improvement in the business,” she said.
Granoff said the company intends to capitalize on its opportunity to “capture more share of wallet” from customers seeking modern design at “acceptable price points” and to maintain its operating discipline. “Our streamlining and our pay-for-performance compensation plan have been powerful in this regard. In every area, we will be vigilant on expenses and allocate our capital carefully.”
For the nine months, income was $4.8 million, or 26 cents, against a loss of $11.2 million, or 63 cents, last year. Revenues grew 11.8 percent to $336.5 million from $301 million, as sales gained 11.5 percent to $303.8 million from $272.5 million.
Shares of the fashion footwear and apparel firm rose 27 cents, or 2 percent, to $13.87 in New York Stock Exchange trading Thursday.