Kenneth Cole Productions, Inc. reported a loss per fully-diluted share for the period of 20 cents a share in the second quarter versus net income per share of 3 cents in the year-ago period. On a non-GAAP basis, after adjusting for costs associated with the proposed acquisition of the company by a group led by Kenneth D. Cole and one-time transition costs relating to changing distribution centers described below, the company's adjusted net loss per fully-diluted share for the second quarter was 3 cents a share.
Net revenues in the second quarter were $97.3 million versus the year-ago level of $102.2 million. Wholesale revenues decreased 3.3% to $50.3 million versus the year-ago period primarily from private label footwear and Reaction handbags. Consumer Direct revenues decreased 6.1% to $37.2 million versus the year-ago period due to the operation of two fewer stores and a comparable store sales decline of 2.7%. Licensing revenues in the second quarter declined 7.8% to $9.8 million versus the prior year's level due principally to the transition of the women's apparel business to an in-house operation from a licensing model and the resetting of contractual minimum royalties of a licensee.
Gross profit, as a percentage of revenues, was 40.6% for the second quarter ended June 30, 2012, unchanged from the year-ago period.
Selling, general and administrative expenses (“SG&A”) in the quarter were $43.7 million, or 44.9% of revenues, versus $40.4 million, or 39.6% of revenues, in the year-ago period. In the current quarter, the Company incurred certain charges for transition costs to a new distribution center as a result of one of its third-party logistics operator's insolvency, as well as professional service costs in connection with the proposed acquisition of the Company by a group led by Mr. Kenneth D. Cole. Excluding these one-time items adjusted SG&A in the second quarter was $39.7 million, or 40.8% of revenues versus 39.6% in the year-ago period.
The net loss for the second quarter was $(3.7) million or $(0.20) per fully diluted share versus income of $0.6 million or $0.03 per fully diluted share in the prior year's quarter. Excluding the two items described in the previous paragraph, the adjusted loss per fully diluted share would have been $(0.03) for the second quarter as compared to adjusted earnings per fully diluted share of $0.04 in the year-ago period.
The Company noted that due to losses in prior periods, it did not provide for any federal income tax (benefit)/expense in its (loss)/earnings per share calculations.
The Company ended the quarter with $49.0 million in cash and no long-term debt. Inventory increased 20.3% to $49.7 million versus the prior year's level of $41.3 million.
