Revenues decline 4.9% apparel brand Kenneth Cole in Q2

On a non-GAAP basis, after adjusting for (i) costs associated with the proposed acquisition of the Company by a group led by Mr. Kenneth D. Cole and (ii) one-time transition costs relating to changing distribution centers, the Company's adjusted net loss per fully-diluted share for the second quarter was $(0.03).

Net revenues in the second quarter were $97.3 million versus the year-ago level of $102.2 million.  Wholesale revenues decreased 3.3% to $50.3 million versus the year-ago period primarily from private label footwear and Reaction handbags.  Consumer Direct revenues decreased 6.1% to $37.2 million versus the year-ago period due to the operation of two fewer stores and a comparable store sales decline of 2.7%. 

Licensing revenues in the second quarter declined 7.8% to $9.8 million versus the prior year's level due principally to the transition of the women's apparel business to an in-house operation from a licensing model and the resetting of contractual minimum royalties of a licensee.

Gross profit, as a percentage of revenues, was 40.6% for the second quarter ended June 30, 2012, unchanged from the year-ago period.

Selling, general and administrative expenses ("SG&A") in the quarter were $43.7 million, or 44.9% of revenues, versus $40.4 million, or 39.6% of revenues, in the year-ago period. 

In the current quarter, the Company incurred certain charges for transition costs to a new distribution center as a result of one of its third-party logistics operator's insolvency, as well as professional service costs in connection with the proposed acquisition of the Company by a group led by Mr. Kenneth D. Cole. 

Excluding these one-time items adjusted SG&A in the second quarter was $39.7 million, or 40.8% of revenues versus 39.6% in the year-ago period.  

The net loss for the second quarter was $(3.7) million or $(0.20) per fully diluted share versus income of $0.6 million or $0.03 per fully diluted share in the prior year's quarter. 

Excluding the two items described in the previous paragraph, the adjusted loss per fully diluted share would have been $(0.03) for the second quarter as compared to adjusted earnings per fully diluted share of $0.04 in the year-ago period.

The Company noted that due to losses in prior periods, it did not provide for any federal income tax (benefit)/expense in its (loss)/earnings per share calculations.

The Company ended the quarter with $49.0 million in cash and no long-term debt.  Inventory increased 20.3% to $49.7 million versus the prior year's level of $41.3 million.

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. 

Kenneth Cole Productions Inc