TPR Tapestry Inc

Kate Spade offered downbeat earnings and revenue guidance for the year, as the retailer reported fourth-quarter sales below Wall Street expectations amid a volatile handbag market.

Shares in the company, down 42% this year through Monday's close, slid 4% premarket to $19.02.

For 2016, Kate sees full-year sales of $1.39 billion to $1.41 billion; analysts polled by Thomson Reuters were expecting $1.45 billion. Kate anticipates per-share earnings in a range of 70 cents to 80 cents for 2016, down from analysts' projection of 82 cents.

Kate Spade also said it expects direct-to-consumer comparable-sales growth in the low- to mid-teens this year.

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.

In February, Kors reported revenue climbed more than expected on such factors as strong demand for its accessories and footwear. Coach in January said its strategy of scaling back promotions and upgrading design and material quality helped buoy its top line.

Kate Spade had tried to cope with the slowdown in the overall handbag market by shedding labels such as Lucky Brand and Juicy Couture as it seeks to focus on its flagship Kate Spade New York brand. Meanwhile, Kate Spade is edging into more-attractive markets such as athleisure through its Beyond Yoga brand.

The company said Tuesday it plans to open 40 to 45 stores this year.

Over all, Kate Spade reported a profit of $61.5 million, or 48 cents a share, compared with $126.5 million, or 99 cents a share, a year earlier. Excluding discontinued operations and other items, earnings per share were 32 cents, compared with 24 cents a share a year ago.

Revenue increased 7.6% to $429 million.

Analysts projected 32 cents a share in adjusted earnings on $442 million in revenue, according to Thomson Reuters.

Fourth quarter 2015 direct-to-consumer comparable sales growth was 14%, or 9% excluding eCommerce. Analysts were expecting 11.4%, or 10.8% excluding eCommerce, according to Consensus Metrix.

Kate Spade's profit margin expanded to 60.2% from 57.8% a year earlier.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

March 01, 2016 08:25 ET (13:25 GMT)

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