KCP Kenneth Cole Productions, Inc.

- Operating Income Increases 18.7% to $4.3 million Versus Year-ago $3.7 Million - NEW YORK, May 1 /PRNewswire-FirstCall/ -- Kenneth Cole Productions, Inc. (NYSE:KCP) today reported financial results for the first quarter ended March 31, 2007. The Company's first quarter net revenues were $129.3 million, an increase of 5.5% versus the year ago level of $122.6 million. Operating income in the quarter increased by 18.7% to $4.3 million versus $3.7 million in last year's first quarter. First quarter earnings per fully-diluted share were $0.17 versus the year-ago first quarter earnings of $0.15 per share. First quarter wholesale revenues were $82.9 million, up 9.3% versus the prior year's level of $75.9 million. The year-ago period was negatively affected, as the Company has previously noted, by approximately $7 million of delayed shipments, due to the start-up of a new distribution facility. Consumer direct revenues for the first quarter increased 1.6% to $36.9 million versus $36.3 million in the same quarter last year, with a comparable store sales decline of 1.5% versus the year-ago quarter. Licensing revenue for the first quarter decreased by 8.7% to $9.5 million versus $10.4 million in the same quarter of the prior year due to a previously announced change in the men's sportswear license. Gross margin for the first quarter was 40.6%, versus the year-ago level of 41.9%, due to slightly lower wholesale margins as well as the shift in mix toward wholesale. SG&A expense as a percent of sales for the first quarter was 37.3% of sales versus 38.9% in the year-ago quarter. The Company's consolidated inventories decreased 13.0% to $46.7 million on March 31, 2006 versus the year-ago level of $53.7 million, in part reflecting the wholesale shipping timing issue from the year-ago period. Consumer direct inventories decreased 13.8% to $21.9 million from $25.4 million in the prior year, while wholesale inventories decreased 12.3% to $24.8 million from $28.3 million last year. The Company is comfortable with the level and content of its inventories. The Company also announced today that it will assume control of its men's collection sportswear business and plans to commence shipments beginning with the Spring 2008 season. The collection will be marketed under the Kenneth Cole New York brand and will incorporate a wider range of price points than previously available under that label. This effort is expected to require approximately $7 million of normal operating costs, which are incremental in fiscal 2007, during which the Company expects to record few, if any, revenues associated with the business. Chairman and Chief Executive Officer Kenneth Cole said, "We are enthusiastic about men's collection sportswear. This is a unique opportunity to take control of an existing, developed, yet under-penetrated business with significant growth opportunities. It is also an opportunity to further enhance and evolve a classification of product paramount to the overall stature of each of our brands." Mr. Cole continued, "We are confident that our new collection will excite both retailers and consumers. The launch will coincide with our company's 25th Anniversary, which will be promoted with the largest marketing campaign in our company's history. At the same time, we are pleased by the ongoing performance and acceptance of the Reaction brand. We are confident that Reaction, which continues to represent the largest portion of our business at retail, will benefit from this initiative." Also today, the Company issued financial guidance for the second fiscal quarter; the Company expects to report net revenues of approximately $120 million and earnings per fully diluted share in the range of $0.14 to $0.16. The Company announced today that its board of directors had authorized its quarterly dividend of $0.18 per share. The dividend is payable on June 14, 2007 to shareholders of record as of May 24, 2007. About Kenneth Cole Productions, Inc. Kenneth Cole Productions, Inc. designs, sources, and markets a broad range of footwear, handbags, and accessories under the registered trademarks KENNETH COLE NEW YORK, KENNETH COLE REACTION, UNLISTED and TRIBECA as well as footwear under the proprietary trademark GENTLE SOULS and under the licensed trademark BONGO. 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, housewares, 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. (In thousands, except Quarter Ended share amounts) (Unaudited) 3/31/07 3/31/06 Net sales $119,868 $112,201 Licensing and other revenue 9,470 10,374 __________ __________ Net revenue $129,338 $122,575 ========== ========== Gross profit 52,554 51,297 Selling, gen'l & administrative 48,221 47,647 __________ __________ Operating income 4,333 3,650 Interest income 1,261 1,252 __________ __________ Income before taxes 5,594 4,902 Income tax expense 2,154 1,838 __________ __________ Net income $3,440 $3,064 ========== ========== Net income per share: Basic $.17 $.15 ========== ========== Net income per share: Diluted $.17 $.15 ========== ========== Average shares outstanding: Basic 20,079,000 20,109,000 Average shares outstanding: Diluted 20,393,000 20,422,000 Balance Sheet Data: 3/31/07 3/31/06 __________________ _______ ________ Cash & Marketable Securities $104,992 $114,942 Due from Factor/Accounts Receivable 65,635 59,618 Inventory 46,736 53,715 Total Assets 363,354 345,952 Working Capital 175,030 186,795 Accounts Payable 29,723 33,387 Long-term Debt 0 0 Total Shareholders' Equity 262,167 247,150 DATASOURCE: Kenneth Cole Productions, Inc. CONTACT: David Edelman, Chief Financial Officer of Kenneth Cole Productions, Inc., +1-212-265-1500; or, investor relations, James R. Palczynski, Principal of Integrated Corporate Relations, Inc., for Kenneth Cole Productions, Inc. +1-203-682-8229 Web site: http://www.kennethcole.com/

Copyright