As William L. McComb passes the baton to Craig Leavitt, he’s handing over a company projecting significant growth in its primary business: Kate Spade.
Fifth & Pacific Cos. Inc. said the Kate Spade business saw adjusted earnings before interest, taxes, depreciation and amortization of about $130 million last year on sales of $742 million, according to preliminary figures. For 2014, sales are projected to grow 10 to 13 percent, pushing EBITDA to a range of $165 million to $175 million.
Comparable sales for Kate Spade’s stores rose 12 percent in the fourth quarter, while comps including both stores and e-commerce shot up 30 percent.
McComb said last year was “all about bringing Kate Spade to its full potential.”
The company gave a glimpse of its plans for the brand this year in a Securities and Exchange Commission filing late Thursday.
The newly dubbed Kate Spade & Co. intends to strengthen its “channel agnostic approach,” “enhance use of partnerships for margin expansion,” “increase investment in marketing” and further develop the Kate Spade Saturday brand.
Overall, that incudes opening 35 doors in North America this year, while opening another 55 in the rest of the world (up to 30 with partners) as well as a move into new categories and the introduction of e-commerce in Europe and Asia.
While growing rapidly, Kate Spade will also have to carry corporate costs, which the firm accounted for as adjusted losses before interest and so on of $65 million last year. That will fall modestly to losses of $50 million to $55 million this year.
With the exception of relatively small and profitable Adelington Design Group jewelry business, Kate Spade will be free of the last vestiges of the former Liz Claiborne Inc. portfolio, which included more than 30 brands at its height.
Lucky Brand, which Fifth & Pacific agreed to sell to Leonard Green & Partners for $225 million, drew adjusted EBITDA of $46 million from sales of about $520 million last year. That deal is expected to close in the first quarter. The company is also in the process of winding down its Juicy Couture business, the intellectual property of which was sold to Authentic Brands Group last year.