Kenneth Cole (KCP) Posts Q3 Results, Q4 Guidance

QualityStocks would like to highlight Kenneth Cole Productions, Inc. (NYSE: KCP). The company designs, sources, and markets a broad range of footwear, handbags, apparel and accessories under the brand names Kenneth Cole New York; Kenneth Cole Reaction; Unlisted; and Le Tigre, as well as footwear under the proprietary trademark Gentle Souls. The company has also granted a wide variety of third party licenses for the production of men's, women's and children's apparel as well as fragrances, watches, jewelry, eyewear, and several other accessory categories.

In the company’s news yesterday,

Kenneth Cole Productions Inc. posted its financial results for the third quarter ended September 30, 2010, followed by guidance for the fourth quarter.

The company reported net revenues for the third quarter 2010 at $119.0 million, up 14.7 percent compared to $103.8 million reported in the third quarter of last year. For the nine months ended September 30, 2010, net revenues increased 11.8 percent to $336.5 million compared to $301.0 million for the comparable period of 2009.

Third-quarter earnings per fully diluted share were $0.11 versus $0.01 in the year-ago period. Diluted earnings per share for the nine-month period grew by $0.89 to $0.26 versus the year-ago loss of ($0.63).

Wholesale sales in the third quarter grew by 21.0 percent to $62.5 million, driven by the launch of the company’s Reaction men’s sportswear and double-digit growth in men’s and women’s footwear; Kenneth Cole’s Consumer Direct revenue for the third quarter increased 8.0 percent to $45.0 million; and licensing revenue in the third quarter increased 10.8 percent to $11.5 million.

“We are pleased to report strong performance in the third quarter, as well as our fifth consecutive quarter of positive operating profit. On a year-to-date basis, we have achieved double-digit revenue growth in each of the company’s operating segments and significant improvement in earnings per share,” Jill Granoff, Kenneth Cole CEO stated in the press release. “Our brands remain strong and our operations are more efficient. We are excited by our recent initiatives to accelerate our growth, particularly the launch of Reaction men’s sportswear and the strategic decision to bring our women’s sportswear license in-house.”

Consolidated gross margin for the third quarter was 42.5 percent compared to 43.3 percent in the year-ago period.

Third quarter operating income rose to $2.3 million compared to operating income of $0.3 million in the same quarter of last year; operating income for the nine months improved by $21.9 million to $4.4 million compared to a reported loss of ($17.5) million in the same period of fiscal 2009.

As of September 30, 2010, the company reported strong with increased cash and no long-term debt. Kenneth Cole had cash and cash equivalents at the end of the quarter were $69.8 million, up $19.8 million versus the $50.0 million reported at September 30, 2009.

The company also issued guidance for the fourth quarter ending December 31, 2010. The company currently expects fourth-quarter net revenues to grow between 10 percent and 12 percent.

“We are encouraged by our improved results and are grateful for the continued hard work of all of our associates. Our global brand potential is significant and we remain committed to increasing value for our shareholders,” Kenneth Cole, chairman and chief creative officer stated.

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Forward-Looking Statement:
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. Risks and uncertainties applicable to the company and its business could cause the company's actual results to differ materially from those indicated in any forward-looking statements.