Revenue during the quarter grew 14.13 percent to $316.53 million from $277.33 million in the previous year period. Gross margin for the quarter contracted 186 basis points over the previous year period to 59.37 percent. Total expenses were 88.28 percent of quarterly revenues, down from 95.56 percent for the same period last year. This has led to an improvement of 728 basis points in operating margin to 11.72 percent.

Operating income for the quarter was $37.10 million, compared with $12.32 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $53.91 million compared with $36.43 million in the prior year period. At the same time, adjusted EBITDA margin improved 390 basis points in the quarter to 17.03 percent from 13.14 percent in the last year period.

Craig A. Leavitt, Chief Executive Officer of Kate Spade & Company, said: “In the third quarter, several macroeconomic factors, including a challenging retail environment and continuing tourist headwinds, impacted our results. That said, we are making solid progress on several strategies that are continuing to drive growth in our business, which is reflected in the consumer’s strong response to our collections at full-price. We remain focused on the factors we can control as we continue to grow our business and execute our long-term strategy, maintaining our commitment to become a $4 billion business at retail.”

Kate Spade & Company expects revenue to be in the range of $1,370 million to $1,400 million for financial year 2016. For financial year 2016, the company projects diluted earnings per share to be in the range of $0.63 to $0.70.

The company has spent $48.56 million cash to meet investing activities during the nine month period as against cash inflow of $36.20 million in the last year period

The company has spent $1.85 million cash to carry out financing activities during the nine month period as against cash outgo of $8.07 million in the last year period.

Cash and cash equivalents stood at $308.10 million as on Oct. 01, 2016, up 40.26 percent or $88.44 million from $219.66 million on Oct. 03, 2015.

Working capital increases sharply
Kate Spade & Company has recorded an increase in the working capital over the last year. It stood at $433.31 million as at Oct. 01, 2016, up 54.91 percent or $153.60 million from $279.72 million on Oct. 03, 2015. Current ratio was at 2.78 as on Oct. 01, 2016, up from 1.99 on Oct. 03, 2015.

Days sales outstanding were almost stable at 19 days for the quarter, when compared with the last year period.

Days inventory outstanding has decreased to 93 days for the quarter compared with 185 days for the previous year period.