Sales through the wholesale channel account for nearly 50% of revenues at both KORS and VRA, but at FNP’s Kate Spade you’re looking at closer to 30% of revenues and a fraction of the door count. Such an underpenetrated presence at wholesale suggests the growth opportunity for Kate Spade isn’t just at retail. While VRA and KORS sell through 3,300 and ~2,700 wholesale doors respectively, COH is now at ~1,200 and Kate only ~400. A few considerations:
- COH wholesale door productivity has declined over the last few years as competition for share among newer brands has increased.
- While VRA appears to have far too many doors, Kate Spade is substantially underpenetrated at wholesale accounts.
- If we assume that Kate Spade door growth doubles its door count to 800 from 400 and continues to increase its productivity from $320 to $450 per door over the next 4-years, FNP could add an additional 200-300bps to its total top-line growth that we have growing at a high-teens rate over that time period.
