Kate Spade to close Kate Spade Saturday, Jack Spade stores; announces China venture
New York -- In a surprise move, Kate Spade & Company announced it is closing all 19 of its lower-priced Kate Spade Saturday stores and all 12 of its Jack Spade menswear stores. Both brands will remain in the luxury company's portfolio, with Kate Spade Saturday being folded into Kate Spade, and Jack Spade being sold at other retailers and online. The company also announced a new joint venture to speed its growth in China, where it sees a long-term potential for 100 stores.
In announcing the store closings, the company said it making the moves to focus on the long-term growth of its core Kate Spade New York business. Kate Spade Saturday stores will be closed in a phased approach during the first half of 2015, and its website will remain active until the label is incorporated into Kate Spade New York. Jack Spade stores will also be shuttered during the first half of this year, but its e-commerce site will continue as usual.
"A key tenet of our roadmap for growth is ensuring that we are disciplined and forward-looking with our investments, putting our resources behind targeted initiatives that will maximize profitability and shareholder value in the near, mid and long term," said Craig A. Leavitt, CEO of Kate Spade & Company. "We continue to focus on two axes of growth – geographic expansion and product category expansion. We are early in our journey as Kate Spade & Company, and we see a clear path to becoming a four billion dollar business at retail.”
To expand its presence in China, Kate Spade is partnering with Walton Brown, a subsidiary of Asian retail and brand management company The Lane Crawford Joyce Group. The partnership will establish a strategic network of stores in key cities, enhanced by an organizational and marketing platform across China, Hong Kong, Macau and Taiwan. Kate Spade sees a long-term potential of 100 stores in China.
Kate Spade announced the moves as it released preliminary results for 2014. For the year, the company expects to report a net sales increase of more than 40% from last year, to a range of $1.13 billion to $1.14 billion.
Related to the store closings, Kate Spade expects to incur cash restructuring charges of $25 to $30 million associated with the assignment or termination of leases and other contracts, severance and other associated activities and non-cash asset impairment charges of $7 million to $9 million.