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By
Reuters
Published
Aug 5, 2015
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Handbag maker Kate Spade's same-store sales beat estimates

By
Reuters
Published
Aug 5, 2015

Kate Spade & Co reported better-than-expected growth in its quarterly same-store sales, helped by demand for its new products lines such as swimwear and children's clothing in North America.

Shares of the company, which also raised the higher end of its full-year comparable sales forecast range, rose 9 percent in premarket trading on Wednesday.

Kate Spade


Kate Spade & Co reported better-than-expected growth in its quarterly same-store sales, helped by demand for its new products lines such as swimwear and children's clothing in North America.

Shares of the company, which also raised the higher end of its full-year comparable sales forecast range, rose 9 percent in premarket trading on Wednesday.

Kate Spade is focusing on its luxury brand kate spade new york after winding down its lower-margin Kate Spade Saturday and Jack Spade menswear brands.

The company's same-store sales, excluding online sales, rose 12 percent in the second quarter. Analysts on average had expected an 8.9 percent rise, according to research firm Consensus Metrix.

Kate Spade's sales in North America rose 13 percent. The region accounts for about 84 percent of the company's total sales.

The company's new quirky styles featuring handbags and accessories shaped like cats, mice and pineapples are finding favor with young women, analysts say.

Kate Spade shows strong "mindshare" among young shoppers, who have plans to buy its products, "which bodes well for future growth," Mizuho Securities USA analyst Betty Chen said.

Kate Spade said it expected same-store sales to grow 9-11 percent in 2015. The company had earlier forecast a high-single digit percentage rise.

The company is a clear winner in women's accessories and is not affected by a weakened brand presence and saturation in the handbag market, Wunderlich analysts wrote in a note.

Larger rival Coach Inc posted better-than-expected quarterly profit and sales on Tuesday, helped by the acquisition of luxury shoe brand Stuart Weitzman Holdings LLC and some recovery in demand in North America.

Michael Kors Holdings Ltd is scheduled to report its quarterly results on Thursday.

Kate Spade reported net income of $8.5 million, or 7 cents per share, for the quarter ended July 4 compared with a loss of $4.4 million, or 3 cents per share, a year earlier.

Revenue rose 5.7 percent to $281.1 million.

Excluding items, the company earned 8 cents per share.

Analysts on average had expected a profit of 11 cents per share and revenue of $293 million, according to Thomson Reuters I/B/E/S.

Kate Spade's shares were trading at $22.57 before the bell. Up to Tuesday's close, the stock had fallen 35 percent this year.

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