Kate Spade & Co (KATE) has reported a 39.18 percent jump in profit for the quarter ended Dec. 31, 2016. The company has earned $85.55 million, or $0.66 a share in the quarter, compared with $61.46 million, or $0.48 a share for the same period last year. On an adjusted basis, the company has earned $52.56 million, or $0.41 a share for the quarter.
Revenue during the quarter grew 9.76 percent to $470.84 million from $428.96 million in the previous year period. Gross margin for the quarter contracted 95 basis points over the previous year period to 59.21 percent. Total expenses were 79.88 percent of quarterly revenues, down from 82.83 percent for the same period last year. This has led to an improvement of 295 basis points in operating margin to 20.12 percent.
Operating income for the quarter was $94.74 million, compared with $73.66 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $118.42 million.
Craig A. Leavitt, chief executive officer of Kate Spade & Company, said "Our solid fourth quarter and fiscal year performance demonstrate the strength of our differentiated business model, as we continued to gain market share and deliver strong growth despite a challenging retail environment. In 2016, we further strengthened our handbag portfolio, introduced new categories to our casual ready-to-wear classifications, and thoughtfully expanded our global store base, opening 52 net new owned and partner-operated stores. At the same time, we remain committed to maximizing value and are exploring strategic alternatives that are in the best interests of our Company and shareholders."
Operating cash flow improves significantly
Kate Spade & Co has generated cash of $244.89 million from operating activities during the year, up 131.95 percent or $139.31 million, when compared with the last year.
The company has spent $59.24 million cash to meet investing activities during the year as against cash inflow of $19.27 million in the last year.
The company has spent $3.16 million cash to carry out financing activities during the year as against cash outgo of $8.47 million in the last year period.
Cash and cash equivalents stood at $478.54 million as on Dec. 31, 2016, up 60.66 percent or $180.68 million from $297.85 million on Jan. 02, 2016.
Working capital increases sharply
Kate Spade & Co has recorded an increase in the working capital over the last year. It stood at $533.06 million as at Dec. 31, 2016, up 50.35 percent or $178.52 million from $354.54 million on Jan. 02, 2016. Current ratio was at 3.37 as on Dec. 31, 2016, up from 2.33 on Jan. 02, 2016.
Debt remains almost stable
Kate Spade & Co has recorded a decline in total debt over the last one year. It stood at $393.41 million as on Dec. 31, 2016, down 0.85 percent or $3.39 million from $396.79 million on Jan. 02, 2016. Total debt was 35.43 percent of total assets as on Dec. 31, 2016, compared with 40.47 percent on Jan. 02, 2016. Debt to equity ratio was at 0.92 as on Dec. 31, 2016, down from 1.62 as on Jan. 02, 2016.
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