PRESS RELEASE: NEW YORK, Aug. 12, 2014 /PRNewswire/ — Kate Spade & Company (NYSE: KATE) today announced results for the second quarter ended July 5, 2014.
The Company is separating its former Kate Spade reportable segment into two reportable segments, Kate Spade North Americaand Kate Spade International. The Company’s Adelington Design Group operating segment is also a reportable segment. Please refer to the item captioned “Presentation of Segments” for more information. As the Company has substantially completed the wind-down of the Juicy Couture business, Juicy Couture is now reported as discontinued operations. Therefore, results from continuing operations exclude Juicy Couture and Lucky Brand.
For the second quarter of 2014 on a GAAP basis, loss from continuing operations, was ($14) million, or ($0.11) per share, compared to a loss from continuing operations of ($24) million, or ($0.20) per share, for the second quarter of 2013.
Net sales for the second quarter of 2014, were $266 million, an increase of $87 million, or 48.7%, from the comparable 2013 period. Adjusted earnings per share from continuing operations for the second quarter of 2014 was $0.05, compared to adjusted loss per share of ($0.08) for the second quarter of 2013.
Adjusted EBITDA, net of foreign currency transaction adjustments, was $32 million for the second quarter of 2014, compared to $7 million for the second quarter of 2013. Comparable Adjusted EBITDA, net of foreign currency transaction adjustments, was $11 million for the second quarter of 2013.
For the first half of 2014, the Company recorded a loss from continuing operations of ($52) million, or ($0.42) per share, compared to a loss from continuing operations for the first half of 2013 of ($47) million, or ($0.40) per share. Net sales for the first half of 2014 were $490 million, an increase of $154 million, or 46.0%, from the comparable 2013 period, including an $18 million benefit associated with the additional week in 2014. Adjusted earnings per share from continuing operations in the first half of 2014 was$0.01 compared to an adjusted loss per share from continuing operations of ($0.18) in the first half of 2013. Adjusted EBITDA, net of foreign currency transaction adjustments, was $49 million for the first half of 2014, compared to $11 million for the first half of 2013. Comparable Adjusted EBITDA, net of foreign currency transaction adjustments, was $18 million for the first half of 2013.
Craig A. Leavitt, Chief Executive Officer of Kate Spade & Company, 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. Adjusted EBITDA for Kate Spade & Company, net of foreign currency transaction adjustments, was $32 million for the second quarter of 2014, a $21 million increase compared to the second quarter of 2013. In addition, we achieved comparable store productivity of $1,477 per square foot over the last twelve months, our 16th consecutive quarter of annualized store productivity growth. We are increasing Total Company full year 2014 Adjusted EBITDA guidance to a range of $120 million – $130 million from the previously guided range of $115 million – $125 million.”
Mr. Leavitt concluded: “Net sales for both our North American and International segments grew 55% and 54%, respectively, illustrating that our differentiated product resonates with consumers around the world. We have a clear vision of our customer and continue to design strong collections as we shape our fast-growing, global lifestyle brand.”
George Carrara, President and Chief Operating Officer of Kate Spade & Company, said: “We are pleased with our outperformance. Since completing the transition to our newly integrated organization this quarter, our team is able to cohesively manage our initiatives in a more streamlined, effective way. Currently, we are conducting our annual business planning process and are actively pursuing both existing and newly identified margin expansion opportunities.”
The Company will sponsor a conference call at 10:00am Eastern time today to discuss its results for the second quarter of 2014. The dial-in number is 1-888-694-4676 with pass code 79282758. The webcast and slides accompanying the prepared remarks can be accessed via the Investor Relations section of the Kate Spade & Company website at www.katespadeandcompany.com. An archive of the webcast will be available on the website. Additional information on the results of the Company’s operations is available in the Company’s Form 10-Q for the second quarter 2014, to be filed with the Securities and Exchange Commission.