Kate Spade Swings to a Profit as Sales Jump
November 05 2015 - 8:50AM
Dow Jones News
Kate Spade swung to a better-than-expected profit in its latest
quarter as the retailer's move to de-emphasize the handbag
continues to pay off.
Shares in the company, down 39% this year through Wednesday's
close, gained 4% in premarket trading.
Kate Spade, the former Fifth & Pacific Cos. and Liz
Claiborne Inc., has shifted its focus amid weakness in a saturated
handbag market. Rivals including Michael Kors Holdings Ltd. and
Coach Inc. have similarly felt the pinch as shoppers spend less on
purses and increasingly opt for smaller, less expensive options
when they do spring for a new bag. On Wednesday, Kors pointed to a
smaller-bag trend when it cut sales and profit guidance.
To cope, Kate Spade has shed dozens of labels—such as Lucky
Brand and Juicy Couture—and announced pans to shutter its Kate
Spade Saturday and Jack Spade stores as it seeks to focus on its
flagship Kate Spade New York brand. Meanwhile, Kate Spade is edging
into more attractive markets like athleisure through its Beyond
Yoga brand.
Chief Executive Craig Leavitt credited the 11% jump in
third-quarter sales to diversified offerings and the introduction
of new product categories. The increase came even as the retailer
continued to pull back profit-eating promotions. Kate Spade's
profit margin slipped to 61.2% from 62.8% a year earlier, but
year-to-date it edged up to 61% from 60.8%.
Overall, Kate Spade reported a profit of $2.3 million, or 2
cents a share, up from a loss of $9.13 million, or 7 cents, a year
earlier. Excluding discontinued operations and other items,
earnings per share were 6 cents. A year earlier, the company broke
even on an adjusted basis.
Revenue increased to $277.3 million from $250.4 million.
Analysts projected 4 cents in adjusted per-share earnings on $280
million in revenue, according to Thomson Reuters.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 05, 2015 08:35 ET (13:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Tapestry (NYSE:TPR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Tapestry (NYSE:TPR)
Historical Stock Chart
From Sep 2023 to Sep 2024