Kenneth Cole posts wider loss, suspends dividend
BANGALORE (Reuters) - U.S. shoe and clothing maker Kenneth Cole Productions Inc KCP.N posted a wider fourth-quarter loss, forecast a weak first quarter as gross margin pressures persist and suspended its quarterly dividend to conserve cash.
Kenneth Cole cut an additional 10 percent of its total headcount last week, Chief Executive Jill Granoff said on a conference call with analysts. In January, the company said it cut its headcount by 10 percent.
The company, known for its leather footwear, also reduced non-media related marketing expenditures since the close of the fiscal year as part of its efforts to further rein in costs.
Cost-reduction measures taken during 2008 and in the first quarter of 2009 are expected to save more than $20 million annually, the company said.
The company, which also manufactures accessories such as eyewear, watches and fragrances, expects an operating loss of 40 cents to 45 cents a share for the first quarter, excluding restructuring charges.
Analysts on average were expecting a loss of 26 cents a share, excluding items, according to Reuters Estimates.
Like a lot of other companies, Kenneth Cole has been reducing inventories to conserve cash, which has hurt gross margins. Year-end inventory was about 10 percent lower compared with the year-ago level.
However, the company's inventory will not be balanced until late second quarter or early third quarter, Granoff said, adding that the company expects continued margin pressure throughout the spring season.
For the fourth quarter, the company posted a net loss of $12 million, or 67 cents a share, compared with a loss of $3.1 million, or 16 cents a share, last year.
Same-store sales, a key measure of retail health, fell 10.7 percent.
The company previously paid a quarterly dividend of 9 cents a share.
The New York-based company's shares, which have lost 70 percent of their value since touching a high of $19.73 in May last year, closed down 6 cents at $5.84 Tuesday on the New York Stock Exchange.
(Reporting by Mihir Dalal in Bangalore; Editing by Deepak Kannan)
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