Kate Spade Sales Continue to Climb, Even as Promotions Wind Down

The company is continuing its global expansion with new stores in London and Latin America next year.
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Lauren Indvik
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The company is continuing its global expansion with new stores in London and Latin America next year.
A Kate Spade concession in Paris. Photo: Pascal Le Segretain/Getty Images

A Kate Spade concession in Paris. Photo: Pascal Le Segretain/Getty Images

Kate Spade & Company execs have plenty to celebrate heading into the holiday season. For the third quarter ending Oct. 3, direct-to-consumer comparable sales (that is, sales made on katespade.com and at Kate Spade stores open for more than a year) were up 16 percent, with net sales up 10.7 percent to $277 million. It was an impressive performance: The company managed to grow despite decreasing promotional activity both in its own stores and at the stores of its wholesale partners, and despite having wound down its Kate Spade Saturday brand.

On an earnings call with investors, CEO Craig Leavitt outlined Kate Spade's ongoing plans to become a "global lifestyle brand." During the third quarter, Kate Spade significantly expanded its home offerings to include furniture, lighting and rugs, ranging from a $675 end table to a $6,000 sofa. Leavitt said he was pleased by the early response, and the brand's increasing exposure at home stores. The company also began its expansion into Latin America and the Caribbean, opening its first store in Panama, with plans to open up to 10 points of sale in the region by the end of next year. Expansion also continued in Europe with the launch of e-commerce in France, and in Asia with additional childrenswear stores (operated by a licensing partner) in Japan.

But it was North America that was really the star of the third quarter, with net sales up 18.5 percent. Not surprisingly, the brand's handbags and small leather goods are what continue to drive growth; Leavitt said novelty handbags, like its cat maise style, have done especially well. Meanwhile, the brand's tech accessories (primarily iPhone and iPad cases) have proven particularly effective at bringing in new shoppers: more than half of those buying tech cases are first-time customers.

Looking ahead, Kate Spade announced that it will be opening a new store in London — its fourth — in the city's popular Regent Street shopping district, set to open in 2016. "We remain focused on our two key axes of growth – geographic expansion and product category expansion – and selected the Regent Street location based on customer demand and existing success in this market," Leavitt said. "This progress further establishes our foothold in the European region as we move toward our vision of becoming a powerful, global, multichannel lifestyle brand."

Update: A previous version of this article noted that Jake Spade and Kate Spade Saturday have both been wound down. Jack Spade is still available through e-commerce and Kate Spade's retail partners.