Kate Spade & Company (KATE) has reported an 88.32 percent plunge in profit for the quarter ended Apr. 01, 2017. The company has earned $1.36 million, or $0.01 a share in the quarter, compared with $11.64 million, or $0.09 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $1.57 million, or $0.01 a share compared with $6.89 million or $0.05 a share, a year ago.
Revenue during the quarter went down marginally by 1.16 percent to $271.22 million from $274.42 million in the previous year period. Gross margin for the quarter expanded 146 basis points over the previous year period to 63.22 percent. Total expenses were 97.46 percent of quarterly revenues, up from 93.55 percent for the same period last year. That has resulted in a contraction of 392 basis points in operating margin to 2.54 percent.
Operating income for the quarter was $6.88 million, compared with $17.71 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $30.28 million compared with $35.17 million in the prior year period. At the same time, adjusted EBITDA margin contracted 165 basis points in the quarter to 11.16 percent from 12.82 percent in the last year period.
Craig A. Leavitt, chief executive officer of Kate Spade & Company, said: "Despite a challenging retail environment and the later Easter holiday, we achieved yet another quarter of double-digit eCommerce comparable sales growth, which helped offset softness in bricks and mortar stores. Against this backdrop, we delivered strong gross margin expansion while working to drive profitable growth across our categories and channels. At the same time, our Board of Directors, together with management, continue to evaluate strategic alternatives to further maximize value for our shareholders."
Operating cash flow remains negative
Kate Spade & Company has spent $40.29 million cash to meet operating activities during the quarter as against cash outgo of $12.57 million in the last year period.
The company has spent $11.58 million cash to meet investing activities during the quarter as against cash outgo of $22.49 million in the last year period.
The company has spent $5.84 million cash to carry out financing activities during the quarter as against cash outgo of $3.13 million in the last year period.
Cash and cash equivalents stood at $422.33 million as on Apr. 01, 2017, up 62.03 percent or $161.68 million from $260.65 million on Apr. 02, 2016.
Working capital increases sharply
Kate Spade & Company has recorded an increase in the working capital over the last year. It stood at $536.73 million as at Apr. 01, 2017, up 48.46 percent or $175.20 million from $361.53 million on Apr. 02, 2016. Current ratio was at 3.66 as on Apr. 01, 2017, up from 2.63 on Apr. 02, 2016.
Days sales outstanding were almost stable at 27 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 98 days for the quarter compared with 179 days for the previous year period.
Debt remains almost stable
Kate Spade & Company has recorded a decline in total debt over the last one year. It stood at $392.58 million as on Apr. 01, 2017, down 0.60 percent or $2.38 million from $394.96 million on Apr. 02, 2016. Total debt was 35.95 percent of total assets as on Apr. 01, 2017, compared with 41.49 percent on Apr. 02, 2016. Debt to equity ratio was at 0.90 as on Apr. 01, 2017, down from 1.48 as on Apr. 02, 2016.
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