Kenneth Cole Productions, Inc. Reports 2008 Second Quarter Results

- Reports 2Q EPS of $(0.11), In-Line with Guidance, Ahead of Consensus -

NEW YORK, Aug. 5 /PRNewswire-FirstCall/ -- Kenneth Cole Productions, Inc.
(NYSE: KCP) today reported financial results for the second quarter ended June
30, 2008. The Company reported second quarter net revenues of $111.2 million
and a loss per fully-diluted share of $(0.11), which was in-line with the
Company's most recent guidance, and slightly ahead of consensus.
Consumer Direct revenues for the quarter increased 4.2% to $43.0 million,
reflecting a 1.3% comparable store sales gain, revenues associated with new
stores and growth in internet retail. Licensing revenues were off 3.3% to
$10.3 million versus the prior year, with gains in many categories offset by
the Company's transition of men's sportswear to a wholesale model. The
Company's Wholesale business declined 13.7% to $57.9 million, primarily as a
result of softness in the department store channel.
The Company's second quarter gross margin was 41.4% versus the year-ago
rate of 44.3%, again reflecting pressure from the tough market environment.
The Company noted that SG&A expenditures were approximately flat to the year-
ago level. SG&A as a percentage of revenues increased to 44.2% from 41.1% in
the second quarter of 2007 due to deleveraging and increased costs associated
with sportswear development.
The Company's consolidated inventories decreased 0.9% to $48.8 million at
June 30, 2008. Consumer Direct inventories increased 11.1% to $23.6 million
to accommodate planned same store sales increases and new stores, while
Wholesale inventories decreased by 9.9% to $25.2 million.
The Company's balance sheet remains strong at June 30, 2008 with cash and
cash equivalents of $72.9 million and no long-term debt.
Jill Granoff, Chief Executive Officer, said, "We have conducted an
extensive analysis of the business and are enthusiastic about the Company's
opportunities to increase sales and profitability. We are under-penetrated on
a global basis with potential to grow across categories, geographies, and
distribution channels. Importantly, we continue to have the financial
resources to pursue nearly any strategic path deemed appropriate."
Kenneth Cole, Chairman and Chief Creative Officer, commented, "While we
are not satisfied with our results we continue to make progress and believe we
have significant near and long-term opportunities to improve our performance.
With the addition of Jill and our energized management team, we look forward
to what lies ahead."
The Company noted that it had repurchased 868,600 shares at an aggregate
cost of $13.2 million under its share buyback program during the second
quarter and currently 3.1 million shares remain available for repurchase under
prior authorizations of the Company's Board of Directors. In addition, the
Company announced that its board of directors had approved its quarterly
dividend of $0.09 per share. The dividend is payable on September 10, 2008 to
shareholders of record as of August 21, 2008.
Also today, the Company issued financial guidance for the third fiscal
quarter; the Company expects to report net revenues in the range of $125
million to $130 million and earnings per share of $0.07 to $0.09.
About Kenneth Cole Productions, Inc.
Kenneth Cole Productions, Inc. designs, sources, and markets a broad range
of footwear, handbags, and accessories under the brand names Kenneth Cole New
York; Kenneth Cole Reaction; Unlisted, a Kenneth Cole Production; and Tribeca,
a Kenneth Cole Production, as well as footwear under the proprietary
trademarks Gentle Souls and Le Tigre and under the licensed trademark Bongo.
It also designs, sources and markets men's sportswear under the Kenneth Cole
New York brand.
The Company has also granted a wide variety of third party licenses for
the production of men's, women's and children's apparel as well as fragrances,
timepieces, eyewear, and several other accessory categories. The Company's
products are distributed through department stores, better specialty stores,
and company-owned retail stores as well as direct-to-consumer catalogs and
e-commerce. Further information can be found at http://www.kennethcole.com.
Forward Looking Statement Disclosure
The statements contained in this release, which are not historical facts,
may be deemed to constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Actual future results
might differ materially from those projected in such statements due to a
number of risks and uncertainties, including but not limited to, demand and
competition for the Company's products, the ability to enter into new product
license agreements or to renew or replace existing product licensee
agreements, changes in consumer preferences or fashion trends, delays in
anticipated store openings, and changes in the Company's relationships with
retailers, licensees, vendors and other resources. The forward looking
statements contained herein are also subject to other risks and uncertainties
that are described in the Company's reports and registration statements filed
with the Securities and Exchange Commission.

Kenneth Cole Productions, Inc.
Unaudited

Quarter Ended Six Months Ended
(In thousands, except
per share and outstanding
share amounts) 6/30/08 6/30/07 6/30/08 6/30/07

Net sales $100,893 $108,337 $213,508 $228,205

Licensing and other revenue 10,258 10,612 20,140 20,082

Net revenue $111,151 $118,949 $233,648 $248,287

Gross profit 46,044 52,725 96,271 105,279

Selling, gen'l &
administrative 49,102 48,906 98,217 97,127

Operating (loss) income (3,058) 3,819 (1,946) 8,152

Interest and other income 116 1,554 410 2,815

(Loss) Income before taxes (2,942) 5,373 (1,536) 10,967

Income tax (benefit) expense (890) 2,069 (291) 4,223

Net (loss) income $(2,052) $3,304 ($ 1,245) $6,744

Net (loss) income per
share: Basic $(0.11) $0.16 ($0.07) $0.33

Net (loss) income per
share: Diluted $(0.11) $0.16 ($0.07) $0.33

Average shares outstanding:
Basic 18,583,000 20,225,000 18,954,000 20,152,000

Average shares outstanding:
Diluted 18,583,000 20,566,000 18,954,000 20,480,000

Balance Sheet Data: 6/30/08 6/30/07
Cash & Cash Equivalents $72,867 $107,467
Due from Factor/Accounts Receivable 38,459 45,809
Inventory 48,841 49,261
Total Assets 330,434 364,247
Working Capital 116,992 176,045
Accounts Payable & Accrued Expenses 37,755 31,741
Long-term Debt 0 0
Total Shareholders' Equity 217,491 263,808

SOURCE Kenneth Cole Productions, Inc.

David Edelman, Chief Financial Officer, Kenneth Cole Productions, Inc.,
+1-212-265-1500, or James R. Palczynski, Principal, Integrated Corporate
Relations, Inc., +1-203-682-8229