In Focus

Kenneth Cole Productions... Quite A Production!

I'm probably the least knowledgeable of the Chicks when it comes to fashion and designers. I'm always sticking my foot in my mouth, saying, "Who's that?" when the topic would turn to some designer's latest collection. I have trouble even remembering designers' names because I don't really care. (Okay, sometimes I care a little.) What I really care about is what these companies have to offer as an investment. So what if I can't pick out their wares in the fashion mags, they still might be a good companies. So sticking with Chick Megan's Steve Madden shoe theme, I thought I'd take a gander at Kenneth Cole Productions. (KCP).

1. Buy What You Know: Five years ago, I didn't know the names Kenneth Cole or Steve Madden. I knew what was on sale at Marshall's or TJ Max and I'm sure their stuff was there, but I didn't notice. I did pick up a Kenneth Cole leather jacket at Marshall's a year ago and I still love it. I've since looked at their shoes when I go to the mall. They are so cute, but I just can't justify the price. I know Chick Kristin's husband loves their men's shoes, and since he only wears the best, I'm sure they're good.

2) K.I.S.S.: Yes, clothes and shoes, easy to explain to anyone.

3) Industry: Apparel and shoes, since we become consumers at about age 2, I think this industry is very easy for everyone to understand. (Right now my two-year old likes Scooby Do shoes)

4) Leader in Its Field: Some of KCP's competitors are Vans, Reebok, Nike, Gucci and Steve Madden. Who's the leader? If you were to look at their financials alone, I think KCP is pretty darn good. So how's their product? I had to give Chick Kristin's husband, Tim, a call to find out. He says they're the best shoes he's ever owned. He has nine pairs; he also owns their slacks, some accessories and a leather jacket. He went on to tell me about their new signature store that they just opened in New York City, where they are branching out and making more apparel for women and men. He was there a couple of weeks ago and said it was a great store. He's had one pair of KCP shoes for over 5 years and says they're still great. As you can see, Tim loves their stuff. And no - he's not on their payroll!

5. Repeat Profitability: I think retail is very cyclical; you find something you like, you stick with it until something better comes along. Tim is a repeat customer. I am not, but he has me wondering if I'm missing out on something. I just might have to go and check them out. Now let's check out their numbers:

6. GM: 43.34%

7. NM: 9.17%

8. More Cash than Debt? You betcha! No debt and lotsa cash.

9. Flow Ratio: 2.1

10. Increasing Growth: Their revenues and net margins have grown consistently over the past year. I also took a look at their stock growth. I've compared Kenneth Cole to it's competitors: Vans, Reebok, Nike, Gucci, and Steve Madden. Follow this link to check their growth over the past 5 years. Other than Gucci, Kenneth Cole is the only other company that's beaten the S&P in the past 5 years. Nice job!

11.Strong Management and History: I like the looks of this management team. Kenneth D. Cole is a real guy, was the founder of the company and has been the President since the company started. He's also on the board

Boards of Directors of the American Foundation for AIDS Research (''AmFAR'') and H.E.L.P., a New York agency that provides temporary housing for the homeless. I like management that gives back to the community and from the looks of their website they're doing that too. For more details, follow these links: Kenneth Cole Management, Kenneth Cole Website.

12.On Sale? Not really - a sale price would be around $35 and today they're at $44.

Overall, I like this company. Before writing this article, I had no idea this company was really this good. I'm now going to check out their products and put them on my investment watch-list. I'm sure I won't be sticking my foot in my mouth anymore when it comes to Kenneth Cole.