Kate Spade reports 14 percent rise in Q3 net sales

Kate Spade & Company’s net sales for the third quarter were 317 million dollars, an increase of 39 million dollars or 14.1 percent compared to the third quarter of 2015. Net sales increased 41 million dollars or 15 percent, excluding sales for wind-down operations for the third quarter of 2015.

Commenting on the company’s performance, Craig A. Leavitt, Chief Executive Officer, said, "In the third quarter, several macroeconomic factors, including a challenging retail environment and continuing tourist headwinds, impacted our results. 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. We maintaining our commitment to become a 4 billion dollars business at retail."

Third quarter and first nine months result highlights

Third quarter direct-to-consumer comparable sales growth was 6.7 percent or flat excluding ecommerce. Comparable sales per square foot for kate spade new york stores were 1,615 dollars for the latest twelve months, compared to 1,619 dollars for the twelve month period ended July 2, 2016. Gross profit as a percentage of net sales was 59.4 percent compared to 61.2 percent for the third quarter of 2015.

George Carrara, President and COO of Kate Spade & Company, added: "In the third quarter, we delivered direct-to-consumer comparable sales growth of 7 percent and top-line growth of 15 percent. While gross margin pressures have increased in our off-price business, we were able to offset these conditions through strong expense controls. We expect that these efforts, which enabled us to achieve Adjusted EBITDA margin expansion for the third quarter, will help us achieve our 2016 guidance. "

For the first nine months, on a GAAP basis, the company recorded income from continuing operations of 65 million dollars or 0.50 dollar per diluted share, compared to a loss from continuing operations of 40 million dollars or 0.31 dollar per diluted share, in the same period last year.

Diluted earnings per share were 0.29 dollar compared to 0.15 dollars in the first nine months of 2015. Net sales were 911 million dollars, an increase of 97 million dollars or 11.9 percent. Net sales increased 123 million dollars or 15.6 percent, excluding sales for wind-down operations for the first nine months of 2015. Adjusted EBITDA was 143 million dollars compared to Adjusted EBITDA, excluding wind-down operations of 105 million dollars for the first nine months of 2015.

Sales performance across geographies

Kate Spade North America net sales were 260 million dollars, an increase of 31 million dollars or 13.7 percent. Net sales increased 31 million dollars or 13.8 percent, excluding sales for wind-down operations for the third quarter of 2015. Kate Spade North America segment Adjusted EBITDA was 47 million dollars compared to 31 million dollars for the third quarter of 2015. Segment Adjusted EBITDA excluding wind-down operations was 31 million dollars for the third quarter of 2015.

Kate Spade international net sales were 51 million dollars, an increase of 8 million dollars or 18.9 percent. Net sales increased 10 million dollars or 24.3 percent, excluding sales for wind-down operations for the third quarter of 2015. Kate Spade international segment adjusted EBITDA was 5 million dollars for the third quarter of 2016 and 2015.

Adelington Design Group net sales were 6 million dollars, a decrease of 2.2 percent compared to the third quarter of 2015. Adelington Design Group segment adjusted EBITDA was one million dollars for the third quarter of 2016 and 2015.

Reveals outlook for fiscal 2016

For the fiscal year 2016, the company expects net sales to range between 1.370 billion dollars to 1.400 billion dollars, adjusted EBITDA of 242 million dollars to 260 million dollars, diluted EPS of 0.63 dollar to 0.70 dollar and DTC comparable sales growth between high single-digit to low double-digit. The company plans to open 40 to 45 new stores during the period.

Picture:Facebook/Kate Spade