Kenneth Cole Productions Reports Q1 Revenue Growth and Significant Profit Improvement
New York-based Kenneth Cole Productions Inc. today reported financial results for the quarter ended March 31, 2010. Earnings per fully diluted share were $0.10 in the first quarter versus a loss of ($0.46) in the year-ago period, ahead of expectations. The year-over-year improvement was largely driven by revenue growth, continued gains in gross margin, and expense reduction.
Net revenue in the first quarter grew by 5.9 percent to $109.5 million versus $103.4 million in the year-ago period. Excluding businesses exited in 2009, the company's revenue was up 9.3 percent from the prior year. The company noted that revenue increased in all three of its business segments for the first time in 19 consecutive quarters.
Wholesale sales grew 1.3 percent to $62.4 million. Excluding the impact of exited businesses, wholesale sales grew 6.8 percent. Consumer Direct revenue for the first quarter increased by 13.0 percent to $37.0 million. This improvement was driven by a comparable store sales increase of 5.6 percent, 15 net new stores, and double-digit growth in e-commerce. Licensing revenue in the first quarter increased 12.4 percent to $10.1 million.
Jill Granoff, chief executive officer, commented, "The strong performance we achieved this quarter was driven by growth across categories, genders, and distribution channels. We have seen an increase in Wholesale backlog and reorders, and we are expecting continued comparable store sales growth. Based on these trends and an improving environment, we have confidence that our business momentum will continue."
Consolidated gross margin increased 770 basis points to 41.6 percent compared to 33.9 percent in the year-ago period. Margins grew in both the consumer direct and wholesale business segments due primarily to improved product, reduced promotional activity, and continued effective inventory management.
Selling, general and administrative expenses ("SG&A") improved 540 basis points to 40.7 percent compared to 46.1 percent in the year-ago quarter, with expenses down by $3.1 million. The company achieved this reduction despite additional expenses associated with operating 15 net new stores versus the prior year's period.