Kate Spade New York RTW Spring 2017

Kate Spade & Co. reported third quarter results that beat Wall Street’s consensus estimates.

For the three months ended Oct. 1, net income grew to $29.6 million, or 23 cents a diluted share, from $2.3 million, or 2 cents, a year ago. Diluted EPS from continuing operations was 13 cents. The company a year ago was in the midst of winding down certain businesses. Net sales rose 14.1 percent to $316.5 million from $277.3 million, while direct-to-consumer comparable sales growth was up 6.7 percent. Wall Street was expecting EPS of 9 cents on sales of $310.9 million.

By segment, Kate Spade North America net sales were up 13.7 percent to $260 million. Kate Spade International net sales rose 18.9 percent to $51 million. The company’s Adelington Design Group saw sales slip 2.2 percent to $6 million.

Craig A. Leavitt, chief executive officer, said the quarter was impacted by several macroeconomic factors that included the challenging retail environment and continuing tourist headwinds. “That said, we are making solid progress on several strategies that are continuing to drive growth in our business, which is reflected in the consumer’s strong response to our collections at full-price.”

He added that the company remains “focused on the factors we can control as we continue to grow our business and execute our long-term strategy, maintaining our commitment to become a $4 billion business at retail.”

George Carrara, president and chief operating officer, said gross margin pressures increased in the off-price business, but were offset by strong expense controls. He said that expense control efforts “will help us achieve our 2016 guidance. We remain confident in our long-term strategy.”

At the end of the third quarter, the company had 175 company-owned stores in North America – 108 specialty stores and 67 outlet sites – and 93 overseas, which included 25 specialty stores, 14 outlets and 54 concessions. There were also 92 partner-operated stores and 42 Greater China Joint Venture stores.

For fiscal year 2016, the company projected diluted EPS at between 63 cents and 70 cents, on net sales of between $1.37 billion and $1.40 billion.




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