KCP Kenneth Cole Productions, Inc.

- Company Reports 2Q Revenues of $118.9 Million - NEW YORK, July 26 /PRNewswire-FirstCall/ -- Kenneth Cole Productions, Inc. (NYSE:KCP) today reported financial results for the second quarter ended June 30, 2007. The Company's second quarter net revenues were $118.9 million, a decrease of 12.1% versus the year ago level of $135.3 million. The year ago period benefited, as the Company has previously noted, by approximately $7 million of first quarter orders that were shipped in the second quarter due to the start-up of a new distribution facility. Excluding this $7.0 million, revenues would have decreased 7.3%. Gross margin percentage for the second quarter was up 240 basis points to 44.3%, versus the year ago level of 41.9%. Operating income in the second quarter decreased to $3.8 million versus $8.1 million in last year's second quarter, in part, due to increased expenses for the in-house development of the men's sportswear business, the reduction in royalties and marketing contribution from our men's sportswear licensee and the shift in shipments noted above. Second quarter earnings per fully-diluted share were $0.16 versus the year-ago second quarter earnings of $0.32 per share, and in line with guidance. Comparable store sales declined less than 1%, which reflects continued improvement from prior periods. Consumer Direct revenues for the second quarter were flat compared to the prior year at $41.2 million, while inventory receipts were down more than 15%. Licensing revenue for the second quarter increased by 2.2% to $10.6 million versus $10.4 million in the same quarter of the prior year. Wholesale revenues for the second quarter were $67.1 million, down 19.8% versus the prior year's level of $83.7 million. Excluding the $7 million of shift in shipments from last year noted earlier Wholesale revenues would have decreased 12.5%. SG&A expenses for the second quarter increased by less than 1% to $48.9 million. The Company's consolidated inventories decreased 3.3% to $49.3 million at June 30, 2007 versus the year ago level of $51.0 million. Consumer Direct inventories decreased 11.3% to $21.3 million from $24.0 million in the prior year, while Wholesale inventories increased 3.7% to $28.0 million from $27.0 million last year. The Company is comfortable with the level and content of its inventories. The Company's balance sheet remains strong with cash and marketable securities of $120 million at June 30, 2007, $28 million higher than a year ago. There is no long-term debt. Chairman and Chief Executive Officer Kenneth Cole said, "Although our results were in line with our guidance and we have made some progress, we clearly have much to do. I'm confident that the investments we are making will pay off and will generate the desired improvement in our operating results." Also today, the Company issued financial guidance for the third fiscal quarter; the Company expects to report net revenues in the range of $130 million to $135 million and earnings per fully-diluted share in the range of $0.15 to $0.18. Included in this guidance is approximately $.12 of non-cash stock compensation charges and incremental expenses for the development and production of men's sportswear. The Company announced today that its board of directors had approved its quarterly dividend of $0.18 per share. The dividend is payable on September 13, 2007 to shareholders of record as of August 23, 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. (Unaudited) (In thousands, except Quarter Ended 6 Months Ended Per share amounts) 6/30/07 6/30/06 6/30/07 6/30/06 Net Sales $108,337 $124,877 $228,205 $237,078 Licensing Revenues 10,612 10,384 20,082 20,758 Total Revenue $118,949 $135,261 $248,287 $257,836 Gross Profit $52,725 $56,736 $105,279 $108,033 Selling, Gen'l & Admin. 48,906 48,591 97,127 96,238 Operating Income 3,819 8,145 8,152 11,795 Interest and other income 1,554 1,274 2,815 2,526 Income before taxes 5,373 9,419 10,967 14,321 Income tax expense 2,069 2,932 4,223 4,770 Net Income $3,304 $6,487 $6,744 $9,551 Net Income per share: Basic $.16 $.32 $.33 $.47 Diluted $.16 $.32 $.33 $.47 Average Shares Outstanding: Basic 20,225 20,133 20,152 20,121 Average Shares Outstanding: Diluted 20,566 20,412 20,480 20,417 Balance Sheet Data: June 30, 2007 June 30, 2006 Cash & Marketable Securities $ 120,467 $ 92,220 Due from Factor/Accounts Receivable $ 45,809 $ 62,899 Inventory $ 49,261 $ 50,965 Total Assets $ 364,247 $ 346,767 Working Capital $ 176,045 $ 159,173 Accounts Payable $ 31,741 $ 39,255 Long-term Debt $ 0 $ 0 Total Shareholders' Equity $ 263,808 $ 244,333 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., +1-203-682-8229, for Kenneth Cole Productions, Inc. Web site: http://www.kennethcole.com/

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