US: Kenneth Cole eyes turnaround as Q2 profit dips
- Q2 net profit US$579,000, down from $937,000
- Net revenues down 5.3% to $102.2m
- New CEO is “by no means satisfied” with performance
Footwear and accessories business Kenneth Cole Productions is targeting an improved third quarter after recording a smaller second quarter profit amid falling sales.
Wholesale revenues at the US company were flat at US$52m in the three months to 30 June, but retail sales fell 11.5% to $39.6m thanks to the closure of under-performing stores and a 1.7% decrease in comparable store sales.
Gross margin slumped by 310 basis points to 40.6%, impacted by higher sourcing costs, increased levels of promotion and a shift in the mix as wholesale took a larger proportion of total revenues.
“Although second quarter results were consistent with our short-term expectations, we are by no means satisfied and are dedicated to improving every aspect of our business,” said Paul Blum, the company’s new CEO.
“We are focused on creating great product, more effective marketing and improving the performance of our operating segments across the board.”
Company chairman and chief creative officer Kenneth Cole said he was excited by Blum’s return to the business, which he said was now being “energised and mobilised” by a new strategic plan with a heightened focus on product.
Kenneth Cole is forecasting third quarter earnings per share of $0.29-0.31 on revenue growth of about 15%.
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