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Kenneth Cole achieves Comparable Store sales increase of 3.4%

07
May '08

Kenneth Cole Productions Inc reported financial results for the quarter ended March 31, 2008. The Company reported first quarter net revenues of $122.5 million and earnings per fully-diluted share of $0.04, both in line with its recent guidance.

Consumer Direct revenues for the quarter were $38.5 million, an increase of 4.3%, reflecting both a 3.4% comparable store sales gain and revenues associated with new stores.

Licensing revenues were up 4.4% to $9.9 million, despite the effect of the Company's transition of men's sportswear from a licensing model to a wholesale model. The Company's wholesale business, however, saw softness in the quarter with a revenue decline of 10.7% to $74.1 million.

The Company's first quarter gross margin rose to 41.0% versus the year-ago rate of 40.6%, driven primarily by a shift in revenue mix toward Licensing and Consumer Direct.

SG&A, as a percentage of revenues, increased to 40.1% from 37.3% in the first quarter of 2007 due to increased marketing expenses associated with the launch of the Company's 25th anniversary campaign, its continuing investment in men's sportswear development, and deleveraging that resulted from the wholesale shipment decline.

The Company noted that, excluding the incremental marketing and sportswear expenses, it had reduced operating costs versus year-ago levels.

The Company's consolidated inventories decreased 2.1% to $45.8 million at March 31, 2008. The Company noted that inventory aging had improved versus the prior year. Consumer Direct inventories increased 8.6% to $23.8 million to accommodate same store sales increases and new stores, while Wholesale inventories decreased by 11.5% to $22.0 million.

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