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Reaction performs well at Kenneth Cole

11 Nov '10

4 min read

As a result of the revenue growth in the quarter and successful expense management, 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 versus a loss of ($17.5) million in the same period of fiscal 2009.

The Company noted there was minimal tax expense in the quarter and nine months ended September 30, 2010 due to the reversal of a portion of the Company's deferred tax valuation allowance.

The Company's balance sheet at September 30, 2010 remained strong with increased cash and no long-term debt. 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. Inventory of $51.6 million at September 30, 2010 includes inventory to support the planned growth of our new Reaction men's sportswear business and five new stores to be opened in the fourth quarter.

Fourth Quarter Guidance
The Company today also issued revenue and earnings per share guidance for the fourth quarter ending December 31st, 2010. The Company currently expects fourth quarter net revenues to grow between 10% and 12%. Based upon current business trends, the Company is comfortable with the current consensus EPS estimate of $0.31 on an operating basis, excluding anticipated non-recurring costs principally associated with expected store closings.

Kenneth Cole, Chairman and Chief Creative Officer, concluded, "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 Productions Inc

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