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Kate Spade reports 26.1 percent rise in Q3 net sales

By Prachi Singh

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Kate Spade & Company, for the third quarter ended October 3, 2015 reported net sales excluding sales for wind-down operations of 275 million dollars, an increase of 57 million dollars, or 26.1 percent compared to the third quarter of 2014. Reported net sales were 277 million dollars, an increase of 27 million dollars, or 10.7 percent.

”Our third quarter results, including industry-leading comparable sales increases, underscore that the diversified foundation we have created is driving sustainable growth in sales and profitability, even with our deliberate pullback in a number of key sales and promotional events. We continue to introduce new product categories and enter new markets in a thoughtful way to attract and retain customers,” said Craig A. Leavitt, Chief Executive Officer of Kate Spade & Company.

Third quarter and nine months highlights

On a GAAP basis, income from continuing operations was 5 million dollars, or 0.04 dollar per diluted share, compared to 3 million dollars, or 0.02 dollar per diluted share, for the third quarter of 2014. Adjusted diluted earnings per share from continuing operations were 0.06 dollar, compared to flat in the third quarter of 2014.

For the first nine months, the company recorded a loss from continuing operations of 40 million dollars, or 0.31 dollar per share, compared to a loss from continuing operations for the first nine months of 2014 of 50 million dollars, or 0.40 dollar per share. Reported net sales were 814 million dollars, an increase of 74 million dollars, or 10 percent, from the comparable 2014 period. Adjusted diluted earnings per share from continuing operations were 0.15 dollar compared to flat in the first nine months of 2014. Net sales, excluding sales for wind-down operations, were 788 million dollars, an increase of 156 million dollars, or 24.6 percent.

Country-wise review

Kate Spade North America net sales, excluding sales for wind-down operations, were 228 million dollars, an increase of 46 million dollars, or 25.5 percent. Reported net sales were 228 million dollars, an increase of 36 million dollars, or 18.5 percent, from the comparable 2014 period. The comapny ended the quarter with 101 specialty retail stores and 63 outlet stores, reflecting the net addition over the last 12 months of 17 specialty retail stores and 7 outlet stores.

Kate Spade International net sales, excluding sales for wind-down operations, were 41 million dollars, an increase of 9 million dollars, or 27.5 percent. Reported net sales for the third quarter of 2015 were 43 million dollars, a decrease of 8 million dollars, or 15.8 percent. The company ended the quarter with 20 kate spade new york specialty retail stores, 52 concessions and 13 outlet stores, reflecting the net addition over the last 12 months of 3 concessions and 3 outlet stores and a net reduction of 13 specialty retail stores, including the conversion of 6 specialty retail stores, 3 concessions and 1 outlet store in Hong Kong, Macau and Taiwan to a joint venture; and average retail square footage for Japan and Europe in the third quarter of 2015 was approximately 75 thousand sq. ft., an 18.4 percent increase compared to 2014.

Adelington Design Group net sales were 6 million dollars, an increase of 40 percent adjusting for wind-down operations in 2014. Reported net sales were 6 million dollars, a 10 percent decrease compared to 2014.

Kate Spade