Renowned designer company Kate Spade (NYSE:KATE) wasn't able to turn around its fortunes last year, as it continued to report losses. However, its latest quarterly result portrays a different picture altogether. Let's see what the company is up to and how its peers Coach (NYSE:TPR) and Ralph Lauren (NYSE:RL) are performing.
Kate Spade's strong momentum continued in its latest quarter; the company reported earnings of $1.48 per share versus $0.47 a share in the same period last year. Net sales surged nearly 22% to $426.9 million, driven by a strong performance in the Kate Spade division, which accounted for 60% of the company's total revenue.
The company previously announced that it had sold Lucky Brand Jeans to a Leonard Green Partners affiliate for $125 million. In November, the company sold Juicy Couture's intellectual property to Authentic Brands Group; the business will be winded up this year. All in all, the divestment of Lucky Brand Jeans and Juicy Couture will generate net proceeds of $370 million to $380 million.
Two months ago, Kate Spade acquired businesses in Hong Kong, Taiwan, Macau, Malaysia, Singapore, Thailand, and Indonesia from its long-term partner Globalluxe for $34 million. In Singapore, Malaysia, and Indonesia, the company's new partner Valiram will operate its business; in Thailand, the company has made a distribution agreement with AT Luxury. As far as Hong Kong, Macau, and Taiwan are concerned, Kate Spade has opted for direct-to-consumer sales. To manage these operations, Kate Spade has also established a regional headquarters in Hong Kong.
In fiscal 2013, Kate Spade's retail sales at Globalluxe climbed 25% to $44 million. Though Globalluxe was doing a good job in the region, the new partners, especially Valiram Group, are expected to deliver more revenue for the company in the coming quarters. Valiram, which was established in 1935, is Southeast Asia's leading luxury items and specialist retailer.
For the current quarter, Zacks analysts forecast a loss of $0.04 per share compared to a loss of $0.16 a share in the year-ago quarter. Sales are anticipated to be around $201.2 million, which is far below last year's sales of $371.8 million. But revenue in the prior year included sales from three additional brands which have now been discontinued as they were producing losses for the company.
In its most recent quarter, Ralph Lauren posted an impressive $2.57 per share in earnings, up 11% compared to $2.31 a share in the year-ago quarter. Revenue increased 9% year over year to slightly more than $2 billion. All the segments performed fairly well; retail sales grew 6% while the wholesale business jumped 15% on account of strong momentum in North America. These days, the company is focusing on expanding its Polo brand across the U.S, Europe, and Asia.
Kate Spade's fourth-quarter earnings have more than tripled from the comparable quarter, which indicates that the company is back on track. Changing the company's name to its core brand name, Kate Spade, has already started to turn things around.