Kate Spade net sales soar 42 percent in FY14

Net sales for the fourth quarter of 2014 at Kate Spade & Company were 399 million dollars, an increase of 123 million dollars, or 44.7 percent, from the comparable 2013 period, reflecting increases of 50.5 percent in the Kate Spade North America segment and 56 percent in the Kate Spade International segment, partially offset by a decrease in net sales in the Adelington Design Group segment. Fourth quarter 2014 direct-to-consumer comparable sales growth was 28 percent, or 21 percent excluding eCommerce.

Adjusted EBITDA, net of foreign currency transaction adjustments, was 77 million dollars or 85 million dollars, excluding charges related to announced brand actions for the fourth quarter of 2014, compared to 55 million dollars for the fourth quarter of 2013. Comparable Adjusted EBITDA, net of foreign currency transaction adjustments, was 57 million dollars for the fourth quarter of 2013. For the fourth quarter of 2014 on a GAAP basis, income from continuing operations was 126 million dollars, or 0.99 dollars per diluted share. Adjusted diluted earnings per share from continuing operations in the fourth quarter were 0.24 dollars, compared to 0.13 dollars in the fourth quarter of 2013.

Commenting on the company’s performance, Craig A. Leavitt, Chief Executive Officer of Kate Spade & Company, said, "In 2014, we marked our first year as an independent company and our impressive growth reflects the powerful momentum of Kate Spade & Company. We delivered industry-leading results with full year net sales of 1.139 billion dollars, a 42 percent increase over the same period last year and Adjusted EBITDA of 147 million dollars, a 67 percent increase over comparable Adjusted EBITDA last year."

For the full year 2014, the company recorded income from continuing operations of 77 million dollars, or 0.60 dollars per share. Adjusted earnings per diluted share from continuing operations for 2014 were 0.25 dollars compared to an adjusted loss per share from continuing operations of 0.10 dollars in 2013.

Gross profit as a percentage of net sales decreased to 57.8 percent in the fourth quarter of 2014 compared to 61.6 percent in the comparable 2013 period. Excluding these charges, gross margin as a percentage of sales was 59.7 percent in the fourth quarter of 2014. The majority of this decrease compared to the fourth quarter of 2013 was due to a shift in our channel mix in North America related to accelerating some key outlet store openings and foreign currency exchange pressure on our Japanese business.

Total Kate Spade comparable direct-to-consumer net sales, including eCommerce, increased by 28 percent in the fourth quarter of 2014; excluding eCommerce net sales, comparable direct-to-consumer net sales increased by 21 percent. Net sales for Kate Spade North America were 327 million dollars, a 50.5 percent increase compared to 2013, driven primarily by kate spade new york. The company ended the quarter with 108 specialty retail stores and 58 outlet stores, reflecting the net addition over the last 12 months of 20 specialty retail stores and 16 outlet stores, a 39.9 percent increase compared to 2013.

Net sales for Kate Spade International were 60 million dollars, a 56 percent increase compared to 2013, primarily driven by operations in Japan and Southeast Asia. The company ended the quarter with 42 specialty retail stores, 15 outlet stores and 54 concessions, reflecting the net addition over the last 12 months of 6 specialty retail stores, five outlet stores and nine concessions and the acquisition of six specialty retail stores, one outlet store and two concessions, a 38.8 percent increase compared to 2013.