According to Kenneth Cole, chairman, interim CEO and chief creative officer, the men’s and women’s footwear segments, as well as the consumer-direct and international businesses, represent avenues of growth going forward.
During a conference call with analysts last week, Cole said, “There will be many initiatives to add to the consumer-direct [channel], including full-price and outlet stores, a more penetrated broad-based Internet business and a social networking platform to support all our businesses.”
Cole added that the men’s wholesale shoe business continues to experience excellent sell-throughs into fall, although women’s footwear is lagging, a situation he hopes to soon remedy.
“We have brought in a lot of new talent and we’re looking at ways of re-energizing Kenneth Cole women’s footwear, [having] virtually closed down third-party distribution [and now selling] through our stores,” Cole said. “The opportunity is huge and we know that, and once we fix it, it will right itself very quickly.”
On the bright side, footwear margins are less pressured that apparel margins, according to CFO David Edelman. That’s good news for Kenneth Cole since shoes continue to make up the majority of its wholesale business.
For their part, analysts welcomed the renewed focus on women’s product.
“There is absolutely opportunity in women’s footwear. The brand is great, but the product isn’t, so their footwear business hasn’t reaped benefits from the strength of the cycle in the last two years,” said Jeff Van Sinderen, analyst at B. Riley & Co.
Kenneth Cole expects to be in the black in the second quarter, earning between 2 cents and 4 cents a share on revenue of $105 million to $110 million. For the first quarter ended March 31, the firm lost $17.2 million, or 94 cents a share, due to one-time charges totaling $12.5 million associated with the acceleration of store closings. That compared with a year-ago profit of $1.8 million, or 10 cents.
Net revenue for the period was up 7 percent to $117.5 million from $109.5 million.
Analysts had expected a loss of 21 cents a share on revenue of $112.6 million, according to Yahoo Finance, and will be looking for second-quarter earnings per share of 1 cent on revenues of $106.3 million.
The firm ended the quarter with $54.3 million in cash and cash equivalents, and reiterated it is not putting itself up for acquisition. “Not right now,” said Cole.