Kate Spade Q3 sale better than estimates

Kate Spade & Company ( KATE ) is due to issue its quarterly earnings report in the upcoming extended-hours session. Given its history, traders can expect very active trading in the issue immediately following its quarterly earnings announcement. Historical earnings event related premarket and after-hours trading activity in KATE indicates that the price change in the extended hours is likely to be of limited value in forecasting additional price movement by the following regular session close.

Kate Spade Carmel/S Sunglasses Brown Horn

Kate Spade & Co. KATE, -2.51% reported third-quarter net income of $29.6 million, or 23 cents per share, up from $2.3 million, or 2 cents per share, for the same period last year. Earnings per share were 13 cents using a normalized tax rate. Sales totaled $316.5 million, up from $277.3 million. The FactSet consensus was 8 cents per share on sales of $311 million. Direct-to-consumer same-store sales increased 6.7%, but were flat excluding e-commerce. The company reaffirmed its 2016 guidance of sales between $1.37 billion and $1.40 billion and earnings per share between 63 cents and 70 cents. Kate Spade shares are down 8.1% for the year so far while the S&P 500 Index SPX, -0.68% is up 3.3% for the same period.


Kate Spade & Co. sees FY2016 EPS of $0.63-$0.70, versus the consensus of $0.65. Kate Spade & Co. sees FY2016 revenue of $1.37-1.4 billion, versus the consensus of $1.38 billion.

Craig A. Leavitt, Chief Executive Officer of Kate Spade & Company, 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 remain focused on the factors we can control as we continue to grow our business and execute our long-term strategy, maintaining our commitment to become a $4 billion business at retail."

George Carrara, President and Chief Operating Officer of Kate Spade & Company, added: "In the third quarter, we delivered direct-to-consumer comparable sales growth of 7% and top-line growth of 15%. 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. We remain confident in our long-term strategy."

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