Luxury Luxury Brand Kate Spade Two Quarter Sales Growth

Kate Spade (Kate sbee) is based on

The American brand with red shoes.

According to reports, Wells Fargo & Co. (NYSE:WFC) Wells Fargo Bank analyst Ike Boruchow is optimistic about American accessories and clothing luxury brands.

& Co. (NYSE:KATE) sales and profit margins will improve in the second half of the year, so the rating and target price will be raised.

Kate Spade & Co. (NYSE:KATE) surged 3.9% in early trading on Tuesday.

Ike Boruchow upgraded the rating of Kate Spade & Co. (NYSE:KATE) from "flat market performance" to "win win market". The target price also increased from 16-18 US dollars to 23-24 US dollars, which is higher than that of the stock market closing price of 18.53 US dollars on Tuesday.

Ike Boruchow believes that although the group's two quarter results are not expected to allow investors to put it in the "penalty box", Kate Spade & Co. is still a "

"Especially in challenging environments, sales growth still outperforms competitors such as Coach Inc. (NYSE:COH), Michael, Kors Holdings Ltd. and so on. Therefore, it is believed that it has the potential of strong sales growth and profit margin expansion.

The data show that although the sales and profits of Kate Spade & Co. have double digit growth in the two quarter, the profit level has not reached the market expectation, and the group has lowered the annual performance target more comprehensively, resulting in the 52 week low of the stock price up to 25% to 15.10 US dollars on the day of the August 3rd Quarterly Bulletin.

Ike Boruchow said that the poor performance of last season was mainly due to the misconduct of the group, and one of them was lack of innovation.

According to the data, the growth rate of the same store selling directly to the consumer channel, which accounts for 75% of the total number of business, is 4%, slower than the 19% in the first quarter, far less than the 13% expected by Consensus Metrix, and the growth rate after e-commerce is only 1%.

Ike Boruchow pointed out that the channel access so far this season has shown that the acceptance of its products has improved and sales have improved. It is also possible that the same store sales growth rate will return to 9%-10% level in the second half of this year.

Kate Spade & Co. now expects annual sales to be between $13.7-14.0 billion and $1 billion 410 million lower than the market forecast, which was expected to be $13.85-14.10 billion. The growth rate of direct sales to the consumer channel also dropped from 11%-13% to high single digit.

The outlook for the adjustment of core profit EBITDA, 2.57-2.82, has been reduced from US $100 million to 2.42-2.60 billion US dollars. The diluted earnings per share are expected to be between us $0.63-0.70, far less than the US $0.78 expected by the market, which was originally expected to be US $0.70-0.80.

Ike Boruchow pointed out that Kate Spade & Co., the current EV/2017 fiscal year EBITDA outlook is 7.0x, and investors are still worried that the valuation is too low to form an irresistible buying point. Based on the EBITDA valuation of 9.0x 2017 fiscal year, the stock price is expected to rise to up to $24.

Citi Research analyst Kate McShane also set the target price of Kate Spade Co. (NYSE:KATE) to close to $23 on the second day after the quarterly report, but the original target price was $33, maintaining a "buy rating".

Cowen analyst Oliver Chen chose Kate Spade & Co. (NYSE:KATE) as one of the best performing stocks in handbag industry.

Kate Spade & Co. (NYSE:KATE), the first time on Tuesday, was on the high noon, and only 0.82% higher in the whole day. In the past 6 months, the stock had fallen 22.9%.