Market Overview

Kate Spade Reports Higher Sales In First Quarter Results


Kate Spade (NYSE: KATE) reported mixed first quarter results on Wednesday morning.

The fashion brand known for its colorful designer handbags, clothing and accessories saw its revenue grow 33.6 percent year-over-year to $328 million, topping the consensus estimate by $126.72 million. Kate Spade reported a net loss of $0.06 per share, while analysts were expecting a loss of $0.04 per share.

Kate Spade saw its profit for the quarter rise to $46.2 million from a loss of $52.2 million in the same quarter a year ago.

However, results from continuing operations, which include the planned wind-down of the Juicy Couture line and exclude results from the Lucky brand, declined to a loss of $54.7 million compared to a loss of $39.6 million a year ago.

For the entire company, comparable net sales were $224 million, a rise of 43 percent from a year ago. Of note, the Kate Spade segment saw its revenue rise 54 percent to $76 million from a year ago.

Direct to consumer saw a sales growth of 22 percent as the company opened two global flagship stores in Houston and Tokyo.

“While the promotional environment was much more competitive than last year, we stayed on strategy to build our full-price business in our specialty stores with a focus on client experience and rigorous planning that increased conversions,” the company said in a press release. “Our small leather goods and handbag categories led this robust growth."

During the quarter, the company completed a refinance of High Yield Notes, which will reduce its cash interest expense in excess of $20 million while extending the maturity of its debt and provide better flexibility for early repayment. The company noted that it has “ample liquidity” to fund growth initiatives.

Kate Spade reaffirmed prior guidance for the full year fiscal 2014 and sees its EBITDA being in a range of $115 million to $125 million.

The stock is currently up 8.8 percent at $37.72 in Wednesday's trading.


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Posted-In: Kate SpadeEarnings News