Kenneth Cole Productions Inc.

Consumer GoodsPersonal & Household GoodsPersonal Goods
    
    

    




                  --  Revenues Increase 7.3% vs. Last Year --
        -- SG&A as a Percentage of Revenues Improves 130 basis points--
                 --Operating Results In-line With Expectations-

New  York, New York, May 4, 2011 / PR  Newswire - Kenneth Cole Productions, Inc.
(NYSE:  KCP) today reported financial results  for the first quarter ended March
31, 2011.  As   anticipated,  the  Company  incurred  certain  one-time  charges
associated  with the  acceleration of  store closings.  As a result, the Company
reported  a net  loss per  fully-diluted share  of ($0.94)  in the first quarter
versus  net income of $0.10 in  the year-ago period.  The year-over-year decline
in  earnings was due to those store  closing costs, severance and a reduction in
gross  margin  associated  with  markdowns  and  liquidation  required to manage
inventories.
Net  revenues in  the first  quarter grew  7.3% to $117.5  million versus $109.5
million  in the first  quarter last year.   The increase was  driven by stronger
Wholesale  sales offset partially by  a decline in Consumer  Direct sales due to
the  closing of net 11 stores year-over-year  and a 2.7% comparable stores sales
decline.
Wholesale revenues increased by 19.3% to $74.5 million from $62.4 million in the
year  ago period, primarily driven by an increase in men's footwear and Reaction
men's  sportswear.  Consumer Direct revenues  declined by 10.2% to $33.2 million
versus  the year-ago  level of  $37.0 million.  Licensing revenues  in the first
quarter  declined to $9.8 million versus  $10.1 million in the year-ago quarter.
 This  decline was  primarily attributable  to the  discontinuation of licensing
royalties for Le Tigre.  Otherwise licensing revenues were up 6.5%.
Gross  margin  declined  610 basis  points  to  35.5% versus  41.6% in the first
quarter last year.  This anticipated decline was driven by increased promotional
and clearance activity associated primarily with the accelerated store closings,
rising costs and a shift in mix toward Wholesale sales.
 SG&A,  as a percentage of net revenues, excluding one-time charges in the first
quarter,  improved 130 basis points to 39.4% from  40.7% in the year ago period.
 The  improvement  was  the  result  of  an  ongoing focus on cost efficiencies,
leverage  in  Wholesale,  and  a  shift  in sales mix towards Wholesale revenues
during the quarter.
The  Company reported a net  loss of $17.2 million  for the quarter. The Company
noted  that  included  in  its  results  were $16.0 million in one-time charges,
related  primarily to lease termination  payments and severance.  Total one-time
charges were partially offset by $3.5 million of deferred rent income associated
with the store closings, resulting in net charges of $12.5 million.
The  Company's balance sheet remained strong  at March 31, 2011 with $54 million
in  cash and  no long-term  debt.  The  reduction in  cash versus the prior year
level of $66 million was primarily a result of the lease termination payments in
the  amount of $14.7 million and an  increase in working capital requirements to
run  the men's Reactionsportswear  business.  Total inventory  was $42.4 million
versus  the prior  year's level  of $35.2  million.  This  increase reflects the
additional    inventory    required    to    support    the    new Men'sReaction
sportswear business.   In addition,  despite progress  in clearing  units, total
inventory  at the  close of  the first  quarter remained  elevated due to excess
inventory in retail.  Notwithstanding the year-over-year increase, inventory was
current.
Kenneth  Cole, Chairman and  Interim Chief Executive  Officer, commented, "While
we're  obviously not  pleased with  these results  we are dedicated to improving
every  aspect of our  business. While it's  been necessary to  focus on reducing
costs,  streamlining, and on efficiency building the  past few years, we are now
also  focused on  repositioning our  business for  sustainable growth across all
sectors.   We also intend to  reclaim the leadership position  of the brand, not
just its social voice, but also its fashion and its product positioning."

Second Quarter Guidance

The  Company expects to report second quarter earnings per share on a GAAP basis
of $0.02 - $0.04 on revenues of $105 to $110 million.  While the Company expects
to  remain in a clearance and liquidation mode in the second quarter, it expects
retail  inventories  to  return  to  more  appropriate  levels by the end of the
quarter.




About Kenneth Cole Productions, Inc.
Kenneth  Cole Productions, Inc.  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.   The  Company's  products are distributed through
department  stores, better specialty stores, company-owned retail stores and its
e-commerce     website.      Further     information    can    be    found    at
http://www.kennethcole.com/.

Forward Looking Statement Disclosure
The statements contained in this release, which are not historical facts, may be
deemed  to  constitute  "forward-looking  statements"  within the meaning of the
Private  Securities Litigation Reform Act  of 1995.  Actual future results might
differ  materially from those  projected in such  statements due to  a number of
risks  and uncertainties, including  but not limited  to, demand and competition
for  the  Company's  products,  the  ability  to  enter into new product license
agreements  or to renew or replace existing product licensee agreements, changes
in consumer preferences or fashion trends, delays in anticipated store openings,
and  changes in the  Company's relationships with  retailers, licensees, vendors
and  other resources.  The forward looking  statements contained herein are also
subject  to other  risks and  uncertainties that  are described in the Company's
reports  and  registration  statements  filed  with  the Securities and Exchange
Commission.


Company Contact:
David Edelman
Chief Financial Officer
Kenneth Cole Productions, Inc.
(212) 265-1500

Investor Relations Contact:
James R. Palczynski
Principal
Integrated Corporate Relations, Inc.
(203) 682-8229






 Kenneth Cole Productions, Inc.

(In thousands, except                         Quarter Ended

per share & outstanding share amounts)         (Unaudited)

                                          03/31/11     03/31/10



Net sales                                  $107,696      $99,393



Royalty revenue                               9,777       10,119
                                        ------------ ------------


Net revenues                               $117,473     $109,512



Gross profit                                 41,671       45,550



Selling, gen'l & administrative expenses     46,305       44,580

Store closing & severance costs              12,482           --
                                        ------------ ------------
Total operating expense                      58,787       44,580



Operating (loss)/income                    (17,116)          970



Interest & other income, net                     47          967

Impairment of investments                        --       (20)
                                        ------------ ------------


(Loss)/before income taxes                 (17,069)        1,917



Provision for income taxes                      133           85
                                        ------------ ------------


Net (loss)/income                         $(17,202)       $1,832



Net (loss)/income per share:  Basic         $(0.94)        $0.10



Net (loss)/income per share:   Diluted      $(0.94)        $0.10



Average shares outstanding:  Basic       18,239,000   18,092,000



Average shares outstanding:   Diluted    18,239,000   18,484,000



Balance Sheet Data:                       03/31/11     03/31/10

Cash & Cash Equivalents                   $  54,286    $  66,302

Accounts Receivable, net                     61,654       43,610

Inventory                                    42,354       35,246

Total Assets                                264,031      257,915

Working Capital                              82,300       93,702

Accounts Payable & Accrued Expenses          65,538       40,964

Long-term Debt                                   --           --

Total Shareholders' Equity                  131,329      145,005








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Source: Kenneth Cole Productions Inc. via Thomson Reuters ONE

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