Feb 2, 2015
to expand in Greater China after 2014 sales jump Kate Spade
Feb 2, 2015
Kate Spade & Co estimated that its full-year sales jumped 40 percent as same-store sales rose due to higher demand for its kate spade new york-branded luxury handbags and accessories.
Shares of Kate Spade, which also announced a new joint venture partner for China, rose as much as 12 percent in early trading.
Kate Spade has been increasingly focusing on China as it battles intense competition in North America, its biggest market, from Coach Inc and Michael Kors Holdings Ltd.
Kate Spade said on Thursday it will be buying out partner E-Land Fashion China Holdings Ltd's 60 percent stake in their Chinese joint venture, Kate Spade China, for $36 million.
Walton Brown, a subsidiary of Hong Kong-based retailer Lane Crawford Joyce Group, will be Kate Spade's new partner for the Greater China region. Walton Brown will invest $21 million in Kate Spade China for a 50 percent stake.
Kate Spade said it expected to take a charge of about $5 million related to the transactions.
The company also said its lower-margin brand, Kate Spade Saturday, will become a part of the Kate Spade New York brand. It plans to shut 16 company-owned and three partnered Kate Spade Saturday stores in the first half of 2015.
Kate Spade estimated sales of $1.13 billion-$1.14 billion for the year ended Jan. 3. Analysts on average were expecting $1.10 billion, according to Thomson Reuters I/B/E/S.
The handbag maker forecast sales of $1.20 billion-$1.28 billion for 2015.
Kate Spade's shares were up 10.3 percent at $32.78 in morning trading on the New York Stock Exchange.
$1 = £0.67
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