Kate Spade & Co Stock Sinks Despite Earnings Beat

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Kate Spade & Co (NYSE:KATE) shares fell Wednesday even though the company beat Wall Street’s earnings estimate.

Kate Spade & CoThe luxury accessories maker released its financial results for its third quarter, earning 13 cents per share over the period when adjusted for pretax gains and to account for discontinued operations. Analysts were calling for earnings of nine cents per share for the company.

Kate Spade & Co’s revenue amounted to $317 million, which beat the consensus estimate of $310.94 million by nearly $7 million. The company had a net margin of 7.86% with a return on equity of 28.45%.

The accessories provider’s comp sales were boosted by increased traffic from tourists in the company’s brick and mortar business. Promotion expenses were increased for the period, helping gross margin pressure to improve over the period.

For its fourth quarter, Kate Spade & Co will be adding to its online shop in order to increase its e-commerce capabilities. In comparison, the company’s e-commerce channel experienced a slower transition than expected last quarter.

The company upgraded its full-year earnings expectations to in the range of 63 cents to 70 cents per share. Kate Spade & Co expects revenue to be in the range of $1.37 billion to $1.4 billion.

The retailer added that the holiday season will likely put it in a position to “plan for a very, very high level pricing pressure.”

KATE shares suffered a 9.9% decline Wednesday. Shares have fallen more than 8% over the course of 2016.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/11/kate-spade-co/.

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