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NEW YORK (Nov.. 3, 2009)— Kenneth Cole Productions, Inc. today reported better-than-expected financial results for the third quarter ended September 30, 2009. The company reported earnings per fully-diluted share of $0.01 for the quarter versus its prior guidance of a loss of between $(0.03) and $(0.08) per share and the year-ago loss of $(0.09) per share. The profit performance was the result of improved gross margins, effective inventory controls, and significant reductions in operating overhead versus the prior year's period.
As anticipated, third quarter net revenues decreased to $103.8 million versus $132.1 million in the year-ago period. This was largely due to a decline in wholesale sales resulting from the planned exit from the company's Tribeca and Bongo businesses as well as reductions in associated private label programs and in off-price distribution.

Consolidated gross margin increased 220 basis points to 43.3 percent compared to 41.1 percent in the year-ago period, driven by improved margins in the company's consumer direct business. Selling, general and administrative expenses declined $7.3 million, or 14.1 percent, in the third quarter to $44.6 million versus the year-ago level of $51.9 million as a result of various streamlining initiatives.

Inventory levels at the close of the quarter continued to improve and were down 35.5% to $36.4 million compared to $56.5 million at the end of the third quarter last year. The company noted that its balance sheet remained strong at cash of $50 million and no long-term debt.

Chairman and CCO Kenneth Cole said in a statement, "Our business is improving, although we still have much work yet to do. Our renewed focus on product innovation is creating new opportunities for our brands and our business, which should accelerate our strategic transformation and drive increased value to our shareholders."

CEO Jill Granoff added, "I am pleased that our business returned to profitability in the third quarter. Through the collective efforts of our talented team, we have carefully managed our inventories, improved margins and reduced expenses, while maintaining a strong balance sheet. At the same time, we have begun a comprehensive effort to ensure that we have the right product, at the right price, in the right distribution to meet the needs of today's discerning consumer."

Also today, the company issued financial guidance for the fourth quarter. The Company expects to report net revenues in the range of $107 million to $112 million versus the year-ago level of $127 million and operating earnings per share of between $0.04 and $0.08. A year ago, the Company reported a loss of $(0.67) per share, which included $(0.40) per share of non-operating charges.

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