Splendid Q2 Earnings Push Kate Spade Up to Strong Buy - Analyst Blog

By
A A A

On Aug 14, 2014, Zacks Investment Research upgraded Kate Spade & Co. ( KATE ) to a Zacks Rank #1 (Strong Buy) following its splendid second-quarter 2014 performance as well as raised guidance for the full year.

Why the Upgrade?

On Aug 12, Kate Spade & Co. reported yet another quarter of better-than-expected financial results wherein it's adjusted earnings of 5 cents per share from continuing operations fared better than the Zacks consensus Estimate of a loss of a penny as well as the year-ago quarter's adjusted loss of 8 cents from continuing operations.


Net sales for the quarter, excluding Lucky and Juicy Couture brands rose 48.7% year over year to $266 million, beating the Zacks Consensus Estimate of $229 million. Sales improved due to strong performance at Kate Spade's domestic and international segments.

Bolstered by tremendous financial performance in two back-to-back quarters, the company has raised its full-year 2014 earnings before interest, taxes, depreciation and amortization (EBITDA) and direct-to-consumer comparable sales (DTC comps) growth guidance range.

Kate Spade & Co. now anticipates adjusted EBITDA to come between $120 million and $130 million, up from earlier guidance range of $115-$125 million. Similarly, DTC comps are now projected to grow in the band of 15%-17% compared with the previously projected range of 12%-15%.

Furthermore, the company expressed its intent of splitting the core brand's reportable segments into two: Kate Spade North America and Kate Spade International.  This split will allow investors to have a clear understanding of the financial position of the two divisions.

Other Stocks to Consider

Besides Kate Spade & Co., other stocks in the apparel retail sector that are currently performing well include Citi Trends, Inc. ( CTRN ), The Men's Wearhouse, Inc. ( MW ) and The Buckle Inc. ( BKE ). Citi Trends and Men's Wearhouse sport a Zacks Rank #1 (Strong Buy), while Buckle holds a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BUCKLE INC (BKE): Free Stock Analysis Report

CITI TRENDS INC (CTRN): Free Stock Analysis Report

MENS WEARHOUSE (MW): Free Stock Analysis Report

KATE SPADE&CO (KATE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BKE , CTRN , KATE , MW

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

33,974,386
  • $17.98 ▲ 0.28%
20,763,901
  • $91.29 ▲ 2.06%
19,110,793
  • $7.26 ▼ 1.22%
18,528,869
    $8.33 unch
18,014,920
  • $4.19 ▼ 1.18%
16,448,919
  • $25.83 ▼ 0.19%
14,748,190
  • $7.60 ▼ 1.43%
14,144,383
  • $112.01 ▼ 0.47%
As of 12/24/2014, 02:12 PM


Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com