Digging Into kate spade: Fifth & Pacific Companies Inc (FNP)

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I am so excited about a fashion retailer stock that I’m ready to write in that breathless prose style of the fashion magazines. Fifth & Pacific Companies Inc (NYSE:FNP) , not a California bank but the former lackluster Liz Claiborne, owns one of the very hottest brands around, kate spade. They also own Lucky Brand jeans, Juicy Couture, and Jack Spade, the men’s division for kate spade.

Fifth & Pacific is up 57.33% over the last year as it works off its image as the middle aged Liz Claiborne company. In fact, the share price has tripled since September 2011. The P/E is 17.80 but some of their key statistics aren’t quite as exciting as their brands. Profit margin is 6.66% but operating margin is a negative -2.28%. It is still a small cap company with a market cap of 1.65 billion and it has a large short interest at 15.30%.

Fifth & Pacific Companies Inc (NYSE:FNP)The Star Called kate spade

kate spade is the star in the crown as a higher end accessories and apparel manufacturer. The purses, shoes, and apparel (dresses) run between $300-500 similar to Coach, Inc. (NYSE:COH) and a little cheaper than Michael Kors Holdings Ltd (NYSE:KORS) . Items can go for half that at their outlets. Interestingly, they are launching a tier-two line like Michael Kors Michael line of “affordable” apparel to be called kate spade Saturdays first in Japan and then in the US in the spring. Fifth & Pacific completed the purchase of kate spade Japan in late 2012.

In an Q4 preannouncement on January 14 the company said direct-to-consumer comp sales for kate spade were up 27%. At the ICR XChange presentation on January 17, the company provided more color on kate spade’s success with 100% sales growth globally with five new stores in the Middle East. Also, in 2013 40 new kate spade stores are opening in North America and 25 internationally. The company boasted average sales per square foot at existing kate spade stores of $1,100. Not Apple store numbers but very good nonetheless. Their kate spade e-commerce database grew 50% in 2012 and like Urban Outfitters their kate spade website is attractive and clean and their blog is entertaining and cheaper than a fashion mag.

Fifth & Pacific also owns higher end costume jewelry companies, Trifari, Monet, Dana Buchman, and Marvella. (Not really of interest except to vintage costume jewelry collectors like me). These and other heritage brands, they call them Partnered Brands, include Liz Claiborne and Lizwear are run separately under the Adelington Design Group division for a total of four main brands.

The company said Q4 direct-to-consumer comp sales for Lucky were up 3% while Juicy Couture was down 2%. The Juicy Couture division put in place a new CEO, Paul Blum, in December in hopes of improving the merchandising and inventory issues that led to soft sales at the division. There may be more problems than a new CEO can handle with Juicy Couture as the fashionable tracksuits and hoodies just don’t seem to be as popular as a year ago.

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