• Q1 net loss of US$55.2m
  • Gross margin narrows to 60.6%
  • Sales grow 28.4%
Kate Spade has been narrowing its focus

Kate Spade has been narrowing its focus

Apparel and accessories business Kate Spade & Company has swung to a loss in its first-quarter amid plans to wind down some businesses, but revealed plans to grow in Latin American.

In the three months ended 4 April, losses amounted to US$55.2m from earnings of $46.2m a year earlier.

Kate Spade has been narrowing its focus and earlier this year announced plans to close its Kate Spade Saturday and Jack Spade stores to focus on its flagship brand.

Gross margin narrowed to 60.6% in the quarter, compared to 61.2% in the comparable period last year.

Net sales, excluding sales for wind-down operations, increased 28.4% to $240m, while reported sales were up 14.2% to $255m.

Kate Spade North America sales reached $187m, an increase of 30.8%, while international sales were up 18% to $47m.

CEO Craig Leavitt, said: "This quarter, our overall performance reflects positive momentum across our four category pillars – women's, men's, children's and home.

"Looking ahead, we'll continue to focus on driving profitability, accelerating growth across geographies and product categories and broadening our customer base. We are confident in the strength of our business model and are making significant progress toward becoming a $4bn business at retail."

Separately, the company announced plans to expand the Kate Spade New York brand presence in Latin America with a new distribution agreement with Exclusive Brands International that will span 17 territories throughout Central and South America and the Caribbean.

Neil Saunders, CEO of Conlumino, noted: "Back at home in North America, Kate Spade continues to make good progress on the sales front. However, even in a region more familiar with the name and ethos of the company, it still needs to improve marketing if it is to succeed in new product areas, such as home. Ultimately, success relies on being able to communicate a clear and compelling brand proposition – something we believe Kate Spade has to work harder on."