Kate Spade’s Q4 Revenue Misses Forecasts, Profit Inline

Kate Spade Polka Dot Pumps
Kate Spade pumps, $175.
Courtesy of Bloomingdale's.

Kate Spade & Co., the handbag maker that became a Wall Street top pick after other brands were plagued by consumer fatigue, fell short of sales estimates in Q4 while its profits were inline.

The New York-based company said Tuesday that its income from continuing operations, for the fourth quarter ending Jan. 2, 2016, was $62 million, or 48 cents per diluted share, a 51 percent decline from the year-ago quarter when income was $126 million, or 99 cents per diluted share. Adjusted diluted EPS from continuing operations were 32 cents, a 33 percent rise from the comparable quarter when diluted EPS were 24 cents. Analysts polled by Yahoo Finance had predicted EPS of 32 cents.

Fourth quarter reported revenue totaled $429 million, an increase 7.6 percent from the comparable 2014 period. Adjusted revenue totaled $428 million, a 13.9 percent gain from the comparable quarter. Those numbers missed analysts’ bets for revenue of $441.6 million.

Kate Spade CEO Craig Leavitt continued to suggest that international expansion remains a major priority for the firm, which also announced Tuesday its plans to enter India via a partnership with India-based Reliance Brands Limited, a subsidiary of Reliance Industries Group.

In 2015, we became a stronger, refocused Kate Spade & Co. We made significant progress along our two axes of growth — product category and geographic expansion — introducing 14 new product categories and entering 8 new countries,” Leavitt said in a release. “Our results reflect our success, with sales growth of 21 percent on a pro forma basis over last year. In addition, our quality of sale efforts are successfully fueling brand aspiration and our channel-agnostic approach was a key driver of growth both during the fourth quarter and throughout 2015. We will continue to prioritize these important points of differentiation in 2016.”

For the full year, the company reported income from continuing operations of $22 million, or 17 cents per diluted share, a 71.4 percent decline from the prior year’s income of $77 million, or 60 cents per diluted share. Reported net sales were $1.2 billion, a year-over-year increase of 9.1 percent. Adjusted diluted EPS were 48 cents compared to 25 cents in 2014.  Adjusted net sales were $1.2 billion, an increase of 20.6 percent compared to 2014.

Looking ahead, we will harness the powerful momentum we created in 2015 to drive Kate Spade & Co.’s growth across our four category pillars — women’s, men’s, children’s and home. As we enter 2016, we are well-positioned for sustainable long-term growth,” Leavitt said.

In 2016, the firm expects net sales in the range of $1.39 billion and $1.41 billion and diluted EPS in the range of $257 million and $282 million.