Kenneth Cole Productions (KCP)

Kenneth Cole Productions (KCP) designs, sources and markets a broad range of fashion footwear and handbags, with markets apparel and accessories contributing a meager 7% to the top-line. The company markets its products to more than 7,500 department and specialty store locations, as well as through its Consumer Direct business, which includes more than 80 retail and outlet stores, consumer catalogs and interactive websites, including on-line e-commerce.

Footwear market is growing and interestingly, even athletic footwear is becoming more fashion-oriented and has reached $19 billion by 2006. The highly competitive fashion footwear market demands rapid flexibility with multiple product lines to match the changing consumer tastes and preferences. This goes well with the company, as its product mainly targets people who are fashion conscious. Further, the company has made strategic initiatives to elevate and reposition its brands which will help them to be in a better position to grow domestically as well as internationally.

On a negative front, KCP’s handbags business has been hampered due to decrease in demand. However, company’s focus on sportswear should generate enough revenue that could offset the loss from handbags business. Further, the recently amended agreement with Paul Davril would cause some slide in its licensing revenues.

The company’s top-line saw a rise of 5.8% led by strong growth in the Kenneth Cole Reaction branded footwear products, partly offset by declines in the company’s handbag businesses. Further, the company has been able to maintain its gross margin around 40%. KCP’s efforts to strive internationally and focus on sportswear should boost its sales and thereby enhance shareholders value.