Retail

Kate Spade Targets Near-Quadruple Revenue Growth

Flexibility and a penchant for experimentation are two key traits retailers will need to succeed in a present and future commerce ecosystem increasingly defined by consumer centricity and digital channels, among other changes.

For one, high-fashion accessory and handbag retailer Kate Spade & Company is reworking its branding strategies and reviewing strategic alternatives to increase shareholder value and improve its profit margins, as the company said in its Q4 earnings call.

The main change for the company is a shift into the lifestyle space, breaking into sales of home goods and apparel on top of accessories. For the full-year 2016, Kate Spade reported double-digit top-line growth of 14 percent, hitting comp sales growth of 9 percent to hit some $1.381 billion in net sales.

“Three years ago we established Kate Spade & Company as a standalone business to focus our capital and resources on unleashing the full potential of the Kate Spade New York brand,” said CEO Craig Leavitt in the company’s Q4 earnings call. “As we have grown, we have developed a differentiated business model; significantly expanded our brand across two axes of growth, product category and geographic expansion; enhanced our omnichannel capabilities; and streamlined our organizational and operating structure. As a result of our focused direct-to-consumer and channel-agnostic approach, we have grown our business faster than our industry peers.”

With a net sales growth of 10 percent in 4Q2016, Kate Spade was one of the highest-performing companies in its sector, said Forbes, though the figure was somewhat dwarfed by larger competitors Michael Kors and Coach. But Kate Spade’s expansion to a global, multichannel lifestyle brand has the company confident that it will be able to draw in some $4 billion in annual revenue.

The one problem area that could work against Kate Spade’s revenue goal comes from the company’s international brick-and-mortar sector, where comp sales declined 1.5 percent in Q4, though brick-and-mortar comp sales in North America were positive in the same period.

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