Kate Spade gets out the hatchet | Crain’s New York Business
By Adrianne Pasquarelli
January 29, 2015 11:24 a.m.
Craig Leavitt, CEO of Kate Spade, expects Kate Spade to eventually become a $4 billion business.Photo: Bloomberg
Updated: January 29, 2015 1:12 p.m.
As it turns out, Kate Spade just wasn’t a Saturday kind of girl. Two years after opening its lower-priced casual line, Kate Spade Saturday, the high-end retailer said it will close it down, Kate Spade & Co. announced Thursday. That means that all 19 shops, including a 3,000-square-foot store at 152 Spring St., in the heart of SoHo, will be shuttered by July. The Spring Street store was open for less than 18 months, following innovative digital displays that operated as stores.”We now have a better understanding of our customers’ weekend style,” said Craig Leavitt, chief executive of Kate Spade, in a statement, noting that the company will incorporate such knowledge into its namesake collection. He said he expects Kate Spade to eventually become a $4 billion business. For the fiscal year ended Dec. 28, 2013, the company posted net sales of $1.3 billion. During the summer, Kate Spade announced explosive sales growth but blamed the Saturday line for cutting profits.
The company also said it is shuttering the retail outposts of its Jack Spade men’s brand—a move that will put two more prime retail spaces on the market downtown. By the second half of the year, space at 400 Bleecker St. and 56 Greene St. will be up for grabs. However, Jack Spade will not fade away completely. The brand will still sell online and in department stores such as Nordstrom. In fact, it’s expected to expand its products to include tailored clothing and dress furnishings, according to Thursday’s announcement.
For the 2014 fiscal year, Kate Spade was expecting to increase net sales by more than 40% over the previous year, to between $1.13 billion and $1.14 billion.
Investors cheered the news in Thursday-morning trading, sending Kate Spade’s share price up 9.5%, to $32.54, before 11 a.m.
Analysts were upbeat as well.
“The closures should alleviate investment pressure,” wrote Betty Chen, a retail analyst at Mizuho Securities, in a research note Thursday. “With both brands weighing down overall profitability … we believe management made a prudent decision.”