NEW YORK (May 6, 2009)—A decrease in consumer spending and the challenges of the current economy led to a disappointing quarter for Kenneth Cole Productions, Inc. (KCP). For the first quarter ended March 31, net revenues declined 15.6 percent to $103.4 million versus $122.5 million in the year-ago quarter. Revenue experienced decreases in all segments, including a comparable store sales drop of 20.4 percent.

Ur Best Shot from Kenneth Cole Reaction

According to chairman and CCO Kenneth Cole, “While we continue to be disappointed with our financial results, we are encouraged by some of the progress we are making in some of the new strategic initiatives that we believe will appropriately position the company to be able to operate profitably in any business environment. The company continues to have a strong balance sheet, with no long-term debt, and a talented and motivated organization focused on executing.”

During the first quarter, the company did complete its previously announced initiative to reduce existing annual expenses including the termination of the unprofitable Bongo license effective Dec.31, 2009. The company expects that its efforts to become more focused paired with certain cost-cutting initiatives undertaken over the past 12 months, will result in an annual savings of more than $20 million per year. The company also anticipates it will reinvest approximately $5 million of these savings into new initiatives that will create improved results consistent with its strategic plan.

“We are taking decisive steps to make us a stronger, more focused business that delivers increased profitability and shareholder value,” says CEO Jill Granoff. “We have placed tighter controls on expenses, inventory and capital investment. At the same time, we are pursuing product innovation and an enhanced customer experience in all channels of distribution to build our brand for the long term.”

Inventory at the close of the quarter was $44.1 million, down approximately 4 percent versus the year-ago level. The company predicts further improvement in the second quarter inventory level as planned reductions in receipts take effect.

"… As we gain further traction with our product, marketing and channel initiatives, we expect to enter 2010 with a renewed capability to drive growth and increase profitability," Granoff concludes.

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