Kate Spade Q2 Loss Narrows On Higher Revenues

(RTTNews) - Apparel, handbags and accessories maker Kate Spade & Co. (KATE) on Tuesday reported a loss for the second quarter that narrowed from last year, reflecting strong revenue growth at the Kate Spade North America and International segments. The company's shares are gaining more than 8 percent in pre-market trades.

The New York-based company is separating its former Kate Spade reportable segment into two reportable segments, Kate Spade North America and Kate Spade International. The Adelington Design Group operating segment is also a reportable segment.

Craig Leavitt, Chief Executive Officer of Kate Spade & Co., said, "Despite a more promotional retail environment, Kate Spade & Company had another strong quarter, with sales increases coming across both our North American and International segments."

The company's net loss for the second quarter narrowed to $4.40 million or $0.03 per share from $43.14 million or $0.36 per share in the year-ago period.

The latest quarter's results include income related to discontinued operations of $9.58 million, while the year-ago period's results included loss related to discontinued operations of $19.55 million. The company said it has substantially completed the wind-down of the Juicy Couture business, which is now reported as discontinued operations.

Adjusted earnings per share from continuing operations for the latest quarter were $0.05, compared to adjusted loss per share of $0.08 in the prior-year quarter. On average, ten analysts polled by Thomson Reuters expected the company to report breakeven earnings per share for the quarter.

Net sales for the quarter grew 49 percent to $266.00 million from $178.88 million in the year-ago period. Analysts had a consensus revenue estimate of $237.83 million.

The increase in sales reflects increases in Kate Spade North America and Kate Spade International segments, partially offset by decreases in net sales within the Adelington Design Group segment.

Net sales for Kate Spade North America grew 55 percent from the year-ago quarter to $208.38 million, driven primarily by increases in kate spade new york brand. Net sales for Kate Spade International increased 54 percent to $49.23 million, reflecting increases across all operations in the segment.

Net sales for the Adelington Design Group segment decreased 31 percent from last year to $8.39 million.

Total Kate Spade comparable direct-to-consumer net sales, including e-commerce, increased by 30.4 percent in the quarter. Excluding e-commerce net sales, comparable direct-to-consumer net sales increased by 31.6 percent.

Gross margin for the quarter declined to 58.6 percent from 61.8 percent in the year-ago period. Operating margin was 3.7 percent, compared to negative 2.1 percent last year.

Provision for income taxes in the quarter was $764 thousand, compared to $1.34 million in the prior-year quarter.

KATE closed Monday's trading at $38.87. In Tuesday's pre-market activity, the stock is up $3.19 or 8.21 percent to $42.06.