Kenneth Cole Productions, Inc. today reported financial results for the fourth quarter and full fiscal year ended December 31, 2004. The company's fourth quarter revenues increased 5.3% to $136.1 million, while full-year revenues increased 10.2% to $516.2 million. Fourth quarter earnings per diluted share decreased to $0.45 versus $0.49 in the year-ago period, though full-year earnings per diluted share increased 9.4% to $1.74 versus $1.59 in fiscal 2003.
Chairman and Chief Executive Officer Kenneth Cole said, “Our annual results are a testament to the overall strength of the company and demonstrate our ability to grow regardless of environmental circumstances or challenges in any one particular segment of the business. We are also pleased with an improving Spring performance across most of our businesses.”
Fourth quarter wholesale revenues of $59.6 million were up 4.1% versus the prior year's level and full-year wholesale revenues increased 9.8% to $279.4 million. Consumer direct revenues for the fourth quarter increased 3.9% versus last year to $63.8 million despite a 5.0% comp store sales decline. Even so, full-year consumer direct revenues increased 10.5% to $194.0 million and showed a comparable store sales gain of 2.8%. Licensing revenue for the fourth quarter increased by 19.9% to $12.6 million versus the prior year. For the full year, licensing revenue increased by 11.8% to $42.8 million.
Gross margin for the fourth quarter was 47.0%, comparable with the year-ago level. Gross margin for the full year was 44.8%, also comparable with the fiscal 2003 level.
While SG&A as a percent of revenues for the full year increased only 10 basis points, to 33.8% of revenues, SG&A as a percent of revenues for the fourth quarter was 36.0% of revenues versus 33.7% in the year-ago quarter. This increase was driven by some de-leveraging as a result of lower than anticipated revenues, increased infrastructure, and higher than anticipated costs for Sarbanes Oxley compliance.
The company's consolidated inventories of $47.2 million on December 31, 2004 were up 5.2% versus the year-ago level. Wholesale inventory increased by 9.6% to $24.9 million and consumer direct inventory increased 0.6% to $22.3 million. The company noted that its inventory is current and that it is comfortable with existing levels.
Kenneth Cole Productions, Inc. today also issued earnings guidance for the first quarter and full fiscal year of 2005. For the first quarter, the company anticipates revenues in a range from $128 to $132 million and earnings of $0.36 to $0.38 per diluted share. For the full year, the company anticipates revenues in a range of $550 to $575 million and earnings per diluted share in the range of $1.94 to $2.00. The company noted that this guidance includes both the anticipated non-cash expense of adopting FASB 123R in the third quarter of 2005 and a tax gain associated with the American Jobs Creation Act of 2004.
The company also announced today that its board of directors voted to increase its quarterly dividend by $0.02 to $0.16 per share. The fourth quarter dividend is payable to shareholders of record as of March 9th and is payable on March 25th.
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, a Kenneth Cole Production” and “Bongo.” The company has also granted a wide variety of third party licenses for the production and sales of men's, women's, and children's apparel and accessories. The company's products are distributed through department stores, better specialty stores, and company-owned retail stores in addition to being sold direct to consumers through catalogs and e-commerce.