KENNETH COLE SURGES AHEAD
Byline: Vicki M. Young
NEW YORK — Answering those who doubt its ability to sustain its recent growth, Kenneth Cole Productions posted a healthy 31.8 percent increase in income for the fourth quarter ended Dec. 31 and a 54 percent jump in income for the year after Tuesday’s market close.
In the fourth quarter, income was $11.3 million, or 52 cents a diluted share, compared with $8.6 million, or 39 cents, in the comparable 1999 quarter. Revenue was up 17.4 percent to $110 million from $94 million.
However, because of an anticipated difficult first quarter, the company reassessed its guidance for fiscal 2001 to $1.85. The company is being conservative with first-quarter estimates because of limits on its markdown dollars, which has had a corresponding effect on wholesale orders in the current quarter, company executives said during a conference call to analysts Tuesday.
As reported, the lowering of estimates was expected by Gruntal & Co. analyst John P. Rouleau, who made the prediction last week. First Call consensus estimates for 2001 had ranged between a low of $2.14 and a high of $2.25.
Wholesale sales in the quarter increased 4.2 percent to $50 million, with the increase driven primarily by increased penetration in existing accounts. Sales in the consumer-direct segment skyrocketed 33.5 percent to $54 million, with retail comparable store sales up 4 percent. The increase was driven by new flagship retail locations and expanded stores not included in the comp-store base. Licensing revenue rose 14.1 percent to $5.9 million, with the increase from growth in existing licenses for men’s casual and tailored apparel, as well as for men’s and women’s watches and other accessories.
For the year, income was $38.4 million, or $1.75 a diluted share, versus $24.9 million, or $1.18, in 1999. Revenue rose 30.5 percent to $406.3 million versus $311.4 million in 1999.
Kenneth Cole, president and chief executive officer, said during the conference call that one reason for the reassessment of 2001 EPS was because the “consumer market has become much more difficult in the last several months.” While the first quarter will be a tough one, Cole said, the company is expecting a very strong year overall with earnings and revenue growth of 18 percent. He also pointed out that the company is keeping its brands intact by not allowing growth to be driven by promotional activity.
Kenneth Cole will open seven to 10 new stores during the year. Brand names under the corporate umbrella include Kenneth Cole, Reaction Kenneth Cole and Unlisted.
Shares of Kenneth Cole closed Tuesday at $31.25, down $1.75 or 5.3 percent.
The company’s board authorized a 2 million share expansion of its buyback program, with the total authorized available level now at 2.7 million shares. In 2000, the company repurchased 783,000 shares of common stock at an average price of $32.46.