Fifth & Pacific Companies, Inc.
) fourth-quarter fiscal 2013 adjusted earnings from continuing
operations soared by a whopping 275% to 15 cents per share, while
it fell substantially short of the Zacks Consensus Estimate of 29
cents. The company's GAAP earnings for the fourth quarter came in
at $1.29 per share, surging 207.1% year over year.
Net sales for the quarter, excluding Lucky Brand and including
Juicy Couture rose 22.3% year over year to $427.0 million,
missing the Zacks Consensus Estimate of $537.0 million. Sales
were augmented by a strong performance at Kate Spade, partly
offset by a weak performance at Juicy Couture and Adelington
Design Group segments.
For the fourth quarter, gross profit margin expanded 60 basis
points (bps) year over year to 56.8%, backed by impressive gross
profit at the Kate Spade Segment, partly offset by a decline in
gross margin at Juicy Couture.
Selling General & Administrative Expenses (SG&A) for
the quarter escalated 44.1% to $254.0 million and as a percentage
of sales it increased 910 bps to 59.6%. SG&A was mainly
impacted by the company's expenses related to streamlining
activities, closing down brands, acquisitions and other costs
incurred at the Kate Spade segment. This was partly compensated
by a decline in expenses at the Adelington Design Group and Juicy
During the quarter, the company's adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA), net of
foreign currency transaction adjustments, excluding Lucky Brand
and including Juicy Couture advanced 35.4% to $65 million.
Full Year 2013
For the full year, the company's adjusted loss from continuing
operations narrowed down to 15 cents a share from the year-ago
loss of 31 cents. However, it was wider than the Zacks Consensus
Estimate of a loss of 1 cent a share. Net sales for the year,
including Juicy Couture and excluding Lucky Brand, jumped 21.2%
to $1.3 billion, yet again missing the Zacks Consensus Estimate
of $1.7 billion.
The company's results were primarily driven by the remarkable
performance of its Kate Spade brand, which even amidst a highly
competitive environment delivered a 30% growth in direct to
consumer comparable sales. Further, Fifth & Pacific was well
on track to shut down its Juicy Couture business.
net sales surged 48% to $256.0 million, benefitting from all its
operations. Its adjusted EBITDA increased 48.8% to $64 million
during the fourth quarter.
segment, net sales dipped 1.4% year over year to $152.0 million,
as a result of a fall in specialty retail, wholesale and
licensing businesses, partly compensated by a rise in its
ecommerce and store operations. Adjusted EBITDA for the segment
came down to $10 million from $12 million in the fourth quarter
Adelington Design Group
delivered a 13% decline in net sales to $20.0 million. Adjusted
EBITDA plunged 28.7% to $5 million in the quarter.
Fifth & Pacific ended the year with cash and cash
equivalents of $130.2 million. Total debt at the year end was
$394.0 million compared with $406.0 million at the end of last
year. The company used up $5 million in cash for continuing
operations during the year.
Fifth & Pacific sold its
Lucky Brand Jeans
segment on Feb 3, 2014, to a partner of Leonard Green &
Partners L.P for $225 million, following which it will be counted
under the company's discontinued operations. Also, the company is
on track to dispose its Juicy Couture brand. These divestitures
will make Fifth & Pacific a single-brand company focused on
extracting the best from its core Kate Spade brand.
Along with the earnings results, the company's former Chief
Executive Officer (CEO) Mr. McComb declared Craig Leavitt as the
company's next CEO. Going forward, Mr. McComb is optimistic about
the prospects of its Kate Spade brand and he believes that the
company's new CEO and management will capitalize on the brand's
strengths in 2014.
Taking cue from this positive take on the brand, the former
CEO announced that the company's name will be altered to "Kate
Spade & Company", which will trade under the ticker "KATE"
from Feb 26, 2014.
Other Stocks to Consider
Currently, Fifth & Pacific holds a Zacks Rank #4 (Sell).
Other better-ranked stocks in the apparel-shoe sector include
Christopher & Banks Corporation
) with a Zacks Rank #1 (Strong Buy), along with
Finish Line Inc.
Li Ning Company Limited
) carrying a Zacks Rank #2 (Buy).
CHRISTOPHER&BNK (CBK): Free Stock Analysis
FINISH LINE-CLA (FINL): Free Stock Analysis
FIFTH PACIFIC (FNP): Free Stock Analysis
LI NING COMPANY (LNNGY): Get Free Report
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