Comparable store sales plunged by 20.4 percent for Kenneth Cole Productions, leading to a decrease in net revenues of 15.6 percent to $103.4 million for the first quarter ended March 31. The troubled U.S. economy was blamed, as consumers cut spending and wholesale partners slashed inventories.
The quarterly gross margin fell by 7.1 percentage points to 33.9 percent on continued promotional activities. The period ended with a net loss of $8.2 million, compared with income of $807,000 million in the same period in 2008.
As part of its now-completed initiative to reduce annual expenses, the company’s unprofitable Bongo license will be terminated effective Dec. 31. Total savings from this and other actions taken over the last 12 months are expected to be more than $20 million per year, of which Kenneth Cole says $5 million will be reinvested in new initiatives designed to improve results.
In the second half, the company expects better operating margins as a result of the cost-cutting measures as well as better inventory control and improved product assortment.