KCP Kenneth Cole Productions, Inc.

Kenneth Cole Productions, Inc. Announces Second Quarter Results Reports Earnings Per Share Increase of 12% to $0.38 vs. Year-Ago $0.34 NEW YORK, July 28 /PRNewswire-FirstCall/ -- Kenneth Cole Productions, Inc. (NYSE:KCP) today reported financial results for the second quarter ended June 30, 2005. The company's second quarter net revenues increased 5.6% to $119.3 million. Second quarter earnings per fully-diluted share increased to $0.38 versus $0.34 in the year-ago period, in line with expectations. Chairman and Chief Executive Officer Kenneth Cole said, "We are pleased to have completed the second quarter on plan with respect to both our operational and financial goals. We also made strides in our plan to elevate and reposition our brands. Given the success of such and because of the rapidly changing specialty and department store environments, we have decided to accelerate this strategy. Although this will likely result in some pressure on second half results, we are confident that this is the best decision for the business and it will ultimately generate more meaningful returns, including a stronger, more viable, and relevant business model." Second quarter wholesale revenues of $62.9 million were up 6.7% versus the prior year's level of $58.9 million. Consumer direct revenues for the second quarter increased 3.6% to $46.4 million versus $44.8 million in the same quarter last year. Sales associated with square footage growth offset a comparable store sales decline of 4.0% in the quarter. Licensing revenue for the second quarter increased by 7.7% to $10.1 million versus $9.3 million in the same quarter of the prior year. Gross margin for the fourth quarter was 46.4%, a 100 basis point improvement when compared to the year-ago level. SG&A margin for the second quarter was 37.0% of revenues versus 35.7% in the year-ago quarter, primarily reflecting infrastructure expansion to both support the new brand repositioning strategy and to prepare for the growth which the company expects. The Company's consolidated inventories of $47.7 million on June 30, 2005 were down 13.1% versus the year-ago level of $54.9 million. Wholesale inventories decreased by 20.4% to $24.4 million while consumer direct inventories decreased 3.8% to $23.3 million, each at highly comfortable levels. Kenneth Cole Productions, Inc. also issued revised earnings guidance for the third and fourth quarters of fiscal 2005. The Company now expects third quarter revenues in the range of $140 million to $145 million and earnings per share of $0.48 to $0.52. In the fourth quarter, the Company now expects revenues in the range of $138 million to $142 million and earnings per share of $0.50 to $0.54. The company also announced today that its board of directors had approved its second quarter dividend of $0.16 per share. The second quarter dividend is payable to shareholders of record as of August 25th and is payable on September 15th. 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", "Tribeca", and "Bongo." The company has also granted a wide variety of third party licenses for the production of men's and women's apparel, 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. 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, changes in consumer preferences or fashion trends, delays in anticipated store openings, and changes in the Company's relationships with 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. Quarter Ended Six Months Ended (In thousands, except per share amounts) 6/30/05 6/30/04 6/30/05 6/30/04 Net sales $109,281 $103,720 $229,573 $217,071 Licensing and other revenue 10,054 9,337 19,660 18,363 Net revenue $119,335 $113,057 $249,233 $235,434 Gross profit 55,369 51,374 111,535 103,842 Selling, gen'l & administrative 44,161 40,382 89,143 81,174 Operating income 11,208 10,992 22,392 22,668 Interest income 835 342 1,352 591 Income before taxes 12,043 11,334 23,744 23,259 Income tax expense 4,335 4,307 8,547 8,839 Net income $7,708 $7,027 $15,197 $14,420 Net income per share: Basic $ .39 $ .35 $ .77 $ .72 Net income per share: Diluted $ .38 $ .34 $ .75 $ .70 Average shares outstanding: Basic 19,845,000 20,048,000 19,790,000 19,951,000 Average shares outstanding: Diluted 20,318,000 20,727,000 20,252,000 20,669,000 Balance Sheet Data: 6/30/05 12/31/04 6/30/04 Cash & Marketable Securities $118,769 $120,014 $116,825 Due from Factor/Accounts Receivable 50,310 51,914 42,706 Inventory 47,672 47,166 54,850 Total Assets 315,995 304,587 293,212 Working Capital 179,288 173,007 171,310 Accounts Payable 32,557 35,767 39,221 Debt 0 0 0 Total Shareholders' Equity 229,648 216,528 212,528 DATASOURCE: Kenneth Cole Productions, Inc. CONTACT: David Edelman, Chief Financial Officer of Kenneth Cole Productions, Inc., +1-212-265-1500; or Investor Relations Contact - James R. Palczynski, Principal of Integrated Corporate Relations, Inc., +1-203-682-8229 Web site: http://www.kencole.com/

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