KATE - Announced Earnings Date (3/1). No Preannouncement.
Conclusion: Sentiment in ‘space’ finally improved, and KATE should earn more $ this quarter than it has cumulatively in seven years. Then people should start to look at $0.70-$1.00 in EPS power for the year. Then it’s finally got valuation support – especially with the stock at $15.
KATE put out a press release last night announcing its 4Q release and earnings call. That ends the speculation on a pre-announcement. If we look back at the reasons for the pre-announcement last year in late January it was centered around two things.
1) The discontinuation of Kate Spade Saturday and the closing of Jack Spade retail stores.
2) Concerns over the space. KATE was down 17% vs. the XRT -1% over the first 9 trading sessions in 2014 as KORS and COH continued to weaken on the margin. Then KATE came out and kicked down the door with a 28% comp.
We're not expecting that level of blowout in this year's 4Q print. But, here's what we do know…
a) Same store sale expectations look to be in check at 11% as the company laps its Flash sale reduction in 4Q14 and gets the couple hundred basis point lift from the addition of the Juicy remodel outlet locations.
b) Gross margin guidance is beatable. The street is looking for just a 90bps improvement on last years -390bps decrease. The liquidation of Jack/Saturday inventory cost the company 215bps, and current expectations only assume the company gets a fraction of that back.
c) The top line is primed for 2016 as the company laps the noise around its JV/Distro agreements in Asia and South America, laps the quality of sales initiatives in both company owned and wholesale channels in North America, and starts to see the benefit of a two-handfuls of new licensing agreements. Macro is a concern, but for a company like KATE with ~4% market share and relatively low international presence/share of wallet, we think there are asymmetric drivers for the top line.
NKE - Nike adds to DTC roster. Names head of Digital
Nike is bringing in Adam Sussman to lead the new digital platform that on the company's numbers will account for 30% of the incremental $20bn in dollar growth from FY15-FY20. We think the number is closer to 50% of incremental growth.
(Nike Investor Day 2015)
AMZN - ChannelAdvisor comps show acceleration in January sales for Amazon
AMZN - Amazon Project Dragon Boat looking to build global delivery business
Saks announces that Gilt will open first ever in-store shop in new Saks off 5th NYC location
SHLD - Sears Holdings to accelerate store closures after weak preannounce
SPLS - Staples receives approval from EU for ODP acquisition
CAB - Cabela's former Executive VP Scott K. Williams named President
CONN - Conn's sees January furniture comps increase 12.3% in the furniture and mattress category
TLF - Tandy Leather Factory CEO Jon Thompson resigns
ARO - Sycamore Partners' Aeropostale board designee Kent Kleeberger resigns
Hermès lowers 2016 sales expectations due to economic, geopolitical and monetary uncertainties -- says luxury is not immune to economic cycle