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Inside Kate Spade’s Business and Brands

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Kate Spade’s brands

Kate Spade & Company (KATE) primarily derives its revenue from the sale of two lifestyle brands—Kate Spade New York and Jack Spade. The Jack Spade brand offers fashion products for men. These include briefcases, travel bags, small leather goods, fashion accessories, and apparel. Jack Spade products are primarily sold through e-commerce websites and department stores.

The Kate Spade New York brand product line primarily sells handbags, apparel, and other fashion accessories to women. Under this brand name, the company also sells children’s wear and home products.

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Kate’s international presence

Kate’s products span across demographics, genders, and geographies. For reporting purposes, the company has three major segments: Kate Spade North America, Kate Spade International and Adelington Design Group.

Kate Spade’s North American revenues include sales from the company’s Kate Spade New York and Jack Spade brands in the US and Canada. This segment accounted for 83% of the company’s total sales in fiscal 2015. However, the share of this segment was reduced to about 79% of total sales in fiscal 1Q16.

Asia, Europe, and Latin America

Sales from the International segment include those derived from overseas markets, which includes Japan, Asia (excluding Japan), Europe, and Latin America. About 15% of Kate’s total sales were from the international markets in fiscal 2015. In 1Q16, this segment accounted for 17.8% of the company’s total sales.

Kate’s international exposure is lower than that of other apparel and accessory companies. PVH Corp, VFC Corp (VFC), Ralph Lauren (RL), and Michael Kors (KORS), by comparison, derived 45%, 37%, 34%, and 22%, respectively, of their revenues from international markets in their last reported fiscal quarters.

Adelington Design Group

Sales from the Adelington Design Group segment consists of exclusive arrangements to supply jewelry for the Liz Claiborne and Monet brands and the licensed Lizwear and Liz Claiborne New York brands. This segment accounted for 2.5% of the company’s total sales in 1Q16.

Notably, ETF investors seeking to get exposure to Kate Spade can consider the iShares Morningstar Small-Cap Growth ETF (JKK), which invests 0.53% of its total portfolio in KATE.

Now let’s look at sales growth drivers.

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