Kate Spade Poised to Hit Billion Dollar Mark

Kate Spade

Kate Spade Co. is in demand, poised to hit the billion dollar mark. When it comes to style and fashion, Kate Spade has it in the bag. Whether this refers to a handbag or a bag of money from product sales, either would be accurate. The proof comes from Kate Spade’s recent quarterly sales report, which according to Reuters, shows an upward gain of 30 percent. The brand then saw a boost in shares, rising 21 percent, (KATE.N).

In an article in CNN Money, the company owner, was metaphorically referred to as a teenager with a fresh face. This association was likely to connote the brand’s popularity and trendy fashion appeal. Taken literally, however, it can draw reference to how two of the most prominent teenagers around, have been seen carrying the brand, namely Sasha and Malia Obama. With most of its over $250 million in revenue coming from sales in North America, these two young Kate Spade enthusiasts, are two among many.

Reportedly, Kate Spade is well-regarded among celebrities, also. In pursuit of the brand’s quality handbags full of style, are followers, with the likes of Sarah Jessica Parker, and other A-listers. The brand is, currently, well-positioned to transform its popularity into a business boon.

None of the company’s success can be taken for granted, though. With an impending holiday season, volatility in the form of high promotional costs can take a bite out of margins. Still, the expectation is, with rising demand, the Kate Spade brand can remain poised to hit the billion dollar mark at the end of 2014, according to Reuters.

With such an outlook, Kate Spade is now closing in on the Coach brand. According to CNN Money, Coach has reportedly been in an apparent free-fall decline, now for six consecutive quarters. In the handbag market since 1941, Coach captured mass appeal, although now referred to in the past tense. The company is, however, in the middle of a re-design in progress.

Another handbag competitor, Michael Kors (KORS.N), has been subject to Kate Spade comparisons, within the industry. Kors has, reportedly, slipped as much as 10 percent following a weakened sales report. That Kors is losing ground, there are some that believe this is related to product saturation. As reported by CNBC, a note written by a Stern Agee analyst to investors warns that current comparisons between Kors and Kate Spade need to be viewed with the appropriate perspective.

The analyst’s comments suggest that to assure accuracy, one must compare similar companies, with similar parallels related to performance and growth, as taking place during a similar valuation. Nonetheless, the analyst points out that from an investment standpoint, recommendations are to hold Coach and Kors and buy Kate.

Since Kate Spade launched in 1993, this youthful company is taking steps in the right direction to secure its place in fashion history. Along with handbags, the brand has designs in other accessories, shoes and clothing, as well. Recently, the company introduced a coffee table book, Places to Go, People to See.

Ironically, another handbag rival, Tory Burch introduced her brand’s coffee table book during the same timeframe. Burch also designs trendy handbags. As reported by CNBC, Robin Lewis, co-author of The New Rules of Retail, indicates that Burch is, definitely, one to watch. Nevertheless, Kate Spade is seen as the frontrunner between the two, with well-crafted handbags poised to hit the billion dollar mark.

By Karen J. Dabney

Photo by J J – Flickr

Sources:
CNBC
CNN Money
AM New York
Reuters

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