Kate Spade will shutter some stores and give more attention to e-commerce

January 29, 2015 02:56 PM

Change is underway at upscale apparel and accessories manufacturer Kate Spade & Co. The company announced today that it will close its 16 owned and three partnered Kate Spade Saturday stores, and its 12 Jack Spade stores, by June. operations will continue and get further investment as part of a new strategy the company is developing for the menswear label. will continue as a stand-alone e-commerce site while Kate Spade Saturday stores close, but the company says it intends to fold the casualwear brand into the Kate Spade New York brand.

It is making the changes to put its resources “behind targeted initiatives that will maximize profitability and shareholder value in the near, mid and long term,” says CEO Craig A. Leavitt, CEO of Kate Spade & Co.

The company paired the announcement about the reorganization with its preliminary full-year 2014 financial report, which projects 2014 net sales to be in the range of $1.13 billion to $1.14 billion, a little more than a 40% increase from $803 million in 2013.

This isn’t the first time the company has adjusted its strategy. In February 2014 it sold its Lucky Brand business and renamed itself from Fifth & Pacific Cos. to Kate Spade & Co. to focus on the Kate Spade business. This followed the sale of the Juicy Couture business late in 2013.

While it did not break out what portion of Kate Spade & Co. net sales today are direct to consumer in dollars, it did say direct-to-consumer sales, excluding e-commerce, grew 28% in the fourth quarter and 26% for 2014, including the benefit of a 53rd week. It estimates direct-to-consumers sales in the “high single digits” for 2015. Leavitt, in a conference call with investors, said the manufacturer plans to cut back on price promotions, like flash sales, across all its direct-to-consumer channels in 2015. The company will also roll out a Kate Spade New York line of apparel for kids in the coming weeks.

Kate Spade is No. 176 in the Internet Retailer Top 500 Guide with 2013 web sales of $150 million, according to Internet Retailer estimates for sales coming through, and

Executives say the plan for the Jack Spade brand moving forward is to use a “capital light” distribution strategy. The company says that means expanding and strengthening sales through retailers. The brand will also extend into tailored clothing and dressier apparel in 2015. “With this approach to distribution, Jack Spade is now better positioned to grow as we broaden our customer target,” Leavitt said. The company did not provide details on how it would grow the brand online.

The manufacturer says it will use what it learned about casualwear and its shoppers from the Saturday venture, which launched in 2012, as it incorporates casualwear into the Kate Spade New York brand. The Saturday stores in New York included front windows embedded with touchscreens that let consumers order from around the clock, for example.

With the store closures Kate Spade Saturday joins C. Wonder, another retailer that emphasized the web and e-commerce in stores, in shuttering its stores. C. Wonder began closing its remaining 11 stores, down from a peak of 32, earlier this month, and its e-commerce site,, has gone dark. 

Kate Spade & Co. further announced that it has entered into a 50-50 joint venture to expand its operations in China. The venture is with Walton Brown, a fashion retail and management group. Kate Spade says it sees operating 100-plus stores in China in the long term.





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