In line with what the company predicted in January, Kenneth Cole Productions saw total revenues fall by 4.2 percent to $126.6 million in the fourth quarter ended Dec. 31, on a 10.7 percent drop in comparable store sales.
The net loss for the quarter was $12.0 million versus a $3.09 million loss for the same quarter of 2007. But not including unusual items – such as asset impairment charges, investment write-downs, severance and costs related to closing the company’s office in Italy – the adjusted loss for 2008 was $4.82 million, against income of $3.99 million.
The exceptional charges were part of Kenneth Cole’s restructuring measures, which were meant to save $10 million in annual costs, in part through a 10 percent reduction in its corporate workforce.
The gross margin for the quarter dropped by 7.5 percentage points to 38.1 percent, but the company says that much of this was because it proactively converted inventory to cash during the peak holiday shopping season to increase liquidity and enter the spring season with a more current inventory position. At year’s end, inventory was about 10 percent lower than at the end of 2007.
For the full year, total revenues decreased by 3.6 percent to $492.3 million, with 2.0 percent lower comparable store sales. The annual net loss was $14.8 million against income of $7.08 million in 2007; excluding unusual charges from both years, this figure was a loss of $3.49 million, compared with income of $14,168 for the year before.
The gross margin for 2008 fell by 3.3 percentage points to 40.4 percent.
Since the end of 2008, Kenneth Cole has continued to implement cost-cutting measures, eliminating jobs, adjusting compensation, renegotiating distribution costs and trimming some marketing expenses. These actions should result in another $10 million annual savings, for a total of $20 million a year saved from actions in 2008 and the first quarter of 2009. The company has no long-term debt.
Kenneth Cole Productions also decided to forgo a quarterly dividend in order to preserve liquidity in the uncertain economic climate. It has said it would be willing to reconsider this move if conditions change.