Us Light Luxury Brand Kate Spade Net Profit Surged 12 Times

American light

Net profit of Kate Spade surged 12 times, from $2 million 300 thousand a year ago to $29 million 600 thousand.

A year ago, Kate Spade group began strategic restructuring, closing its low price product line.

Kate Spade Saturday and Jack Spade, the group said it would continue to adjust its strategy to expand the Chinese market.

In the third quarter of this year, the strong response of consumers to the full price product range increased the net sales volume of the group from 14.1% US dollars to 316 million 500 thousand US dollars last year, of which the comparable sales growth of the direct stores increased by 6.7%, which is higher than that of the analysts' expectation. The sales growth of the direct sales outlets increased by 6.7% over the last 277 million 300 thousand years.

Wall Street expects Kate Spade to earn about 9 cents a share in the quarter and sales of $310 million 900 thousand.

By region, Kate Spade is the largest.

Sales in North America rose 13.7% to $260 million compared with the same period last year, while sales in the international market increased by 18.9% to 51 million dollars over the same period last year. Kate Spade CEO Craig A. Leavitt said that although the macroeconomic factors such as the challenging retail environment and sustained tourism resistance continued to grow, the group business continued to grow. Next, the group will continue to implement a long-term strategy, with the goal of selling into the "4 billion dollar club" in the year of Kate Spade.

By the end of the third quarter, Kate Spade group had 175 Direct stores in North America, including 108 stores and 67 sales outlets, and 93 overseas stores, including 25 franchised stores, 14 branches and 54 franchise stores.

In addition, there are 92 cooperative shops and 42 joint venture shops in Greater China.

The company expects diluted earnings per share to be between 63 cents and 70 cents in fiscal year 2016, with annual sales ranging from 1 billion 370 million to 1 billion 400 million dollars.

Kate Spade's quarterly results show that, even under the influence of excessive promotions of some department stores, companies can really attract consumers to buy full priced goods by reducing the volume of department stores.

Kate Spade CEO Craig Leavitt said in a telephone interview on Wednesday that the group has begun to expand its new wholesale distribution channels. Before the start of the partnership, the agreement with the department store will not take part in most of the promotional activities, and strive to establish a full price customer relationship at the very beginning. It is believed that under the continuous penetration of full price business, Kate Spade will have a more positive development in the future.

It is also aware that department stores' excessive promotions will damage the performance of brands including Ralph Lauren, Coach and Michael Kors.

Although the Ralph Lauren and Michael Kors earnings will be released next week, executives of these companies have indicated in the past quarterly conference call that the reduction in the distribution channels of department stores is indeed conducive to the improvement of profitability.

At present, Ralph Lauren is under the leadership of chief executive Stefan Larsson to implement measures to reduce inventory and close bad stores, so as to promote group sales growth.

Michael Kors CEO John Idol also revealed at the Goldman Sachs Global Retail conference in September that in order to maintain the brand's pricing structure and avoid overexposure, the company will no longer participate in promotional coupons and discount activities of department stores and other retailers in February 1st.

Kate Spade CEO Craig Leavitt said in a telephone interview on Wednesday that the group has begun to expand its new wholesale distribution channels. Before the start of the partnership, the agreement with the store will not take part in most of the promotional activities, and try to establish a full price customer relationship at the very beginning. It is believed that under the continuous penetration of full price business, Kate Spade will have more positive results in the future.

In the three months ended October 1st, the us light luxury handbag brand Coach rose by 21.8% to 117 million 400 thousand US dollars in the first quarter compared with the same period last year, and Victor Luis, chief executive of Coach group, emphasized that in order to save Coach's earlier downturn, the company adopted measures such as repositioning the brand, simplifying distribution channels in North America, and reducing shipments of department stores.