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Kate Spade Hopes to Get More Customers Buying More Than Just Handbags

But in the meantime, the brand's Cameron Street bag line is selling like hotcakes.
Photo: Christian Vierig/Getty Images

Photo: Christian Vierig/Getty Images

If Kate Spade New York's Byrdie bag looks familiar, it's probably because your favorite blogger, or your co-worker, or your sister — or you, even — own it, and regularly document its existence on social media. After noting the positive response to its new Cameron Street line (of which the Byrdie is a part) last quarter, Kate Spade doubled down on the product range and is now seeing it pay off in a very real way: In the three months ending on Sept. 30, Kate Spade reported its net sales increasing by 14.1 percent to $317 million, a $39 million lift compared to the same period last year. 

On an earnings call on Wednesday, CEO Craig Leavitt and COO George Carrara emphasized that Kate Spade's "robust handbag focus" had helped to strengthen its performance in the second half of the year, as well as expand its number of cross-category shoppers. And while the Byrdie style proved to be the best-selling handbag in stores this quarter, the company is looking to place a new emphasis on its boxier Lane satchel during the critical holiday season, as well as extend the life cycle of its Cedar Street line, which it began phasing out in the second quarter.

So, what, exactly, caused this handbag lift? Leavitt and Carrara cited the company's increased digital marketing efforts, specifically surrounding its Cameron Street products. Customers responded so positively to the line's introduction last quarter that inventory became a problem; Leavitt and Carrara reported in August that the most popular styles initially sold out and weren't replenished quickly enough. But this quarter, Kate Spade has learned from its earlier hiccup with robust inventory and aggressive marketing on social media and in stores. The company also mentioned its popular "#MissAdventure" video series, the latest installment of which was released in October, as a successful campaign.

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Heading into the critical holiday season, Kate Spade is ramping up its personalization offerings within the handbag category, as well as for tech accessories, jewelry and other small leather goods; in the case of its handbags, the company is expecting interchangeable straps to perform especially well.

As a momentum builds around Kate Spade's full-priced customer, the company is hoping shoppers will increasingly cross over and begin investing in its non-handbag categories — perhaps with its Cameron Street handbags acting as the gateway.

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