Kenneth Cole Productions, Inc. (KCP), Monday reported a loss for the fourth quarter that narrowed from last year, due primarily to lower tax expenses and higher revenues. The company also indicated closing down additional seven stores in the ongoing first quarter, with more closures expected in future. The company's shares declined more than 10 percent in morning trade, following the news.
The New York-based fashion footwear and handbag maker's net loss for the fourth quarter was $2.70 million or $0.15 per share, compared to $51.99 million or $2.88 per share in the previous year.
On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.31 per share for the quarter. Analysts' estimates typically exclude special items.
Net revenue for the quarter rose 10.5 percent to $120.81 million from $109.37 million last year.
The revenue growth was primarily due to an 18.9 percent increase in Licensing and a 1 percent increase in Wholesale revenues, as well as a 16 percent increase in Consumer Direct revenues. Consumer Direct growth was largely driven by a 14.1 percent gain in comparable store sales which stemmed primarily from liquidation and clearance activity associated with the store closings.
Store closings, impairments and other charges declined to $6.32 million from $19.28 million last year.
Income tax expense declined to $0.55 million from $38.73 million in the prior-year quarter.
The company noted that its fourth quarter results, largely reflected the strategic decision to accelerate the closing of underperforming stores. In line with its plan, the company closed eight full-priced stores in 2010, has since closed an additional seven stores in the first quarter of fiscal 2011, and plans to close two more stores in the first half of 2011 for a total of 17 stores.
Despite short-term negative financial impact in the form of charges and inventory liquidation activity due to the store closure, the company expects to realize an annual recurring benefit of approximately $8 million or $0.40 per share pre-tax beginning in the second quarter of fiscal 2011.
In a separate release, Kenneth Cole announced that Jill Granoff will quit as CEO and a Director of the company, effective immediately. Kenneth Cole, Chairman and Chief Creative Officer, will serve as Interim CEO.
KCP is currently trading at $12.53, down $1.45 or 10.37%, on a volume of 0.53 million shares on the NYSE.
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