Kenneth Cole Productions, Inc., a leading designer and marketer of fashion footwear, apparel and accessories, reported financial results for the second quarter ended June 30, 2010.
Earnings per fully-diluted share were $0.05 in the second quarter versus a loss of ($0.18) in the year-ago period, stronger than the Company's previous guidance of $0.00 to $0.03 per share. The better than expected performance was the result of higher than anticipated comparable store sales, increased gross margins, effective inventory management and the ongoing, positive impact of the Company's streamlining initiatives.
Net revenues in the second quarter grew 15.0% to $108.0 million versus $93.9 million in the second quarter last year. Each of the Company's operating segments achieved double-digit revenue growth in the quarter.
Wholesale sales grew 12.8% to $52.1 million. Excluding the impact of exited businesses, Wholesale sales grew 16.0%. Consumer Direct revenue for the second quarter increased by 16.2% to $44.8 million. This improvement was driven by a comparable store sales increase of 8.4%, revenue associated with eight net new stores, and continued double-digit growth in e-commerce. Licensing revenue in the second quarter increased 21.1% to $11.1 million.
Jill Granoff, Chief Executive Officer, commented, "We are pleased to report strong performance in the second quarter, as well as our fourth consecutive quarter of positive operating profit. Our business has clearly turned the corner and is showing traction and positive momentum. Each segment delivered double digit growth, demonstrating that our brands remain strong and that our products are resonating with consumers. We also increased gross margin and achieved continued expense leverage, resulting in greater profitability."
Kenneth Cole, Chairman and Chief Creative Officer, concluded, "We have made good progress in our business and I am proud of our team's effort. We have continued to improve our product offerings and are better serving the needs of today's modern, metropolitan consumer. As we move forward, we will continue to explore all strategic avenues to enhance our customer relationships and maximize value for our stakeholders."
Consolidated gross margin increased 130 basis points to 43.7% compared to 42.4% in the year-ago period. Margins grew due primarily to improved product sell-through and effective inventory management.
Selling, general and administrative expenses as a percent of sales improved by 520 basis points to 42.7% from 47.9% in the year-ago quarter. The Company achieved these results through its streamlining initiatives and expense leverage, despite additional costs associated with operating eight net new stores and the Company's pay-for-performance annual bonus incentive.
As a result of gross margin improvement and expense management, second quarter operating income rose by $6.3 million to $1.1 million compared to an operating loss of ($5.2) million in the same quarter of last year.
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Telangana State Industrial Infrastructure Corporation Limited (TSllC Ltd)")
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Taiwan Textile Federation (TTF)")
