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E-commerce equals 20% of Kate Spade’s business

August 6, 2015 12:02 PM
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E-commerce is no mere accessory at luxury apparel and accessories manufacturer Kate Spade. The web now accounts for 20% of sales, and executives say they plan to roll out a series of enhancements to continue growing through the online channel.

Kate Spade, No. 178 in the Internet Retailer 2015 Top 500 Guide, does not break out online sales. Based on net sales of $281.1 million during the second quarter of fiscal 2015, that 20% figure would put e-commerce sales at around $56 million for the quarter.

A key part of the gain came from online consumers taking a greater interest in full-price offerings as opposed to capitalizing on surprise sales. “Our business now has less reliance on surprise sales in our North American e-commerce channel,” CEO Craig Leavitt told analysts on the company’s Q2 earnings call, according to a transcript obtained from Seeking Alpha. “The percentage of our customer base that are surprise sale-only customers decreased significantly. And this quarter, we reduced the number of surprise sales compared to last year.”

Leavitt noted year-over-year gains in conversion and traffic on Kate Spade’s flagship e-commerce site. To capitalize on that momentum, he said the company is planning on rolling out a buy online, ship from store offering later this year to help customers get their purchases even quicker.

The company also is investing in its web site, incorporating True Fit technology, which provides shoppers with personalized fit and size recommendations.

Leavitt told analysts the company recognized almost immediate results from the True Fit technology. “We are already seeing significantly higher conversion rates with customers using True Fit and have offered nearly 300,000 size recommendations,” he said.

“We are investing resources into our flagship e-commerce site that drive full-price traffic and conversion and we are pleased with the results as demonstrated by two consecutive quarters of outperformance,” added company president George Carrara.

In late June, Kate Spade hired Emilia Fabricant away from apparel retailer Aeropostale Inc. (No. 150 in the Top 500 Guide) to lead the company’s North American efforts. Leavitt views Fabricant’s hiring as key to fueling the company’s online sales growth.

“Her deep experience with luxury retailers combined with mall-based retailers and online businesses makes her an excellent fit and we look forward to her leadership and perspective,” he said.

Heading into the second half of the year, the company plans to improve its mobile offerings by upgrading its mobile platform to make shopping Kate Spade on a mobile phone similar to shopping on a computer or tablet.

“We are highly focused on our mobile channel and are constantly evaluating better and more engaging experiences for our customers, as well as continuing to increase site speed and performance,” Leavitt said.

For the second quarter ended July 4, Kate Spade reported:

  • Net sales of $281.118 million, up 5.7% from $265.998 million during the same time last year.
  • Sales for Kate Spade North America of $235.730 million, up 13.1% from $208.382 million during the same time last year.
  • International sales of $40.718 million, down 17.3% from $49.231 million during the same time last year.

For the first six months of fiscal 2015, Kate Spade reported:

  • Net sales of $536.434 million, up 9.6% from $489.612 million during the same time last year.
  • North American sales of $431.316 million, up 15.9% from $372.135 million during the same time last year.
  • International sales of $93.186 million, down 9.2% from $102.606 million during the same time last year.
 

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