Kenneth Cole posts 3Q profit; shares rise

NEW YORK (AP) — Shares of Kenneth Cole Productions Inc. climbed sharply Wednesday after the apparel retailer reported it moved to a profit in the third quarter as it cut costs.

The maker of shoes, handbags and clothes said late Tuesday its results were helped by better gross margins, inventory management and lower operating costs.

Shares rose $1.24, or 14 percent, to $10.15 in afternoon trading. The stock has ranged from $4.89 to $12.74 over the past year.

But analysts were wary about any signs of a longer-term recovery.

Sterne, Agee&Leach analyst Sam Poser said there was "still no inflection point on sales." He maintained a "Neutral" rating on the shares.

CL King analyst Scott Krasik said that while there were bright spots, "overall sales and margins will remain depressed due to declining wholesale market share, negative same-store sales comparisons and very low levels of productivity in its full-priced retail chain." Same-store sales, or sales at stores open at least a year, are an important retail performance indicator because they measure growth at existing stores rather than newly opened ones.

Krasik also kept a "Neutral" rating on the stock.

In the third quarter, Kenneth Cole earned $186,000, or a penny per share, compared to a loss of $1.6 million, or 9 cents per share, in the same period a year earlier.

Analysts predicted a loss of a penny per share, according to a poll by Thomson Reuters.

Revenue fell 21 percent to $103.8 million from $132.1 million.

Kenneth Cole projected profit of 4 cents to 8 cents per share for the fourth quarter.