KENNETH COLE NET FALLS 54%
Byline: Vicki M. Young
NEW YORK — Kenneth Cole Productions on Thursday posted diluted earnings near the top range of the company’s guidance, but still half those of a year ago.
For the three months ended Sept. 30, income plummeted 54 percent to $5.9 million, or 29 cents a diluted share, compared with $12.9 million, or 59 cents, in the year-ago quarter and estimates of between 27 and 30 cents. Revenue slipped 9.5 percent to $100.9 million from $111 million, which included $95 million in sales and $6 million in licensing income. Sales for the period last year were $104.6 million and licensing revenue was $6.3 million. Kenneth Cole, chairman and chief executive, noted on a conference call that the environment is not conducive to “pushing product into the stores,” and that the firm has been focused on maintaining brand awareness and avoiding the promotional route. “If we go into promotional activity, it would persist throughout the year,” he said.
Cole said that the firm is still committed to growing its Reaction and Unlisted businesses.
The balance sheet, according to the ceo, is strong, with a cash position of $35 million. “Contrary to some rumors, we have no specific plans to make an acquisition,” Cole pointed out, adding that there are some opportunities that the company might be willing to evaluate.
Wholesale revenues for the quarter, the company said, decreased 18.1 percent to $58.4 million compared with $71.3 million last year. Consumer direct revenues, which gained 9.9 percent to $36.6 million versus $33.3 million, were “dramatically impacted” by Sept. 11’s events. Comparable-store sales dropped 15.1 percent. While the September slowdown at retail occurred nationally, nearly a third of the company’s consumer direct revenues are from the New York metro area, which continues to trend “well below” other geographic regions, the company said.
Stanley Mayer, chief financial officer, said that the company is projecting fourth-quarter EPS in a range of between 5 and 10 cents, with revenue in the $85 million to $90 million range. He added that the company expects some gross margin pressure due to closeouts of excess inventory.
Executives said during the call that the company has plans to open one full-priced store in the next six months. There are plans to open at least five more outlets, and a fragrance line will be introduced next year.
Shares of the company on Thursday closed at $14, down 45 cents, on the Big Board.
For the nine months, income was down 46 percent to $14.4 million, or 69 cents a diluted share, versus $27.1 million, or $1.24, in the year-ago period. Revenue dipped 3.5 percent to $286.1 million from $296.4 million. Sales accounted for $269.1 million compared with $280.7 million last year, while licensing income was $17 million versus $15.7 million a year ago.