Meanwhile, both Michael Kors and Coach need to look over their shoulders at Fifth & Pacific Companies Inc (NYSE:FNP), whose kate spade has been rolling out a tier-two line, Saturday, in Japan and the U.S. for its fans with less money than style. The company plans to take it to emerging markets like Russia, India, and Mexico. The Huffington Post called Saturday a challenger to “mass-market preppy favorite J. Crew.”
kate spade New York and its menswear line, jack spade, are on pace to open 65 retail stores this year with ambitions for 400 stores in more than the current 20 countries by 2016. kate spade added net sales of $173 million to Fifth & Pacific Companies Inc (NYSE:FNP)’s coffers last year, a rise of 56.8% for this one brand. kate spade was also early to Asian expansion, opening stores over nine years ago.Its kate spade e-commerce database grew 50% in 2012.
Even better news for Fifth & Pacific Companies Inc (NYSE:FNP), the former Liz Claiborne, would be a decision to sell off lackluster Juicy Couture and Lucky brands. Juicy Couture has definitely lost its juice as a brand with consistently declining sales. Its original founders are rumored to be trying to buy it back from Fifth & Pacific says Women’s Wear Daily.
Although Lucky, a denim brand, has performed marginally better than Juicy, kate spade is the driver of profits for Fifth & Pacific. The company boasted average sales per square foot of $1,100 at existing Kate Spade stores, with Lucky stores only bringing in $462 per square foot.
Fifth & Pacific is close to 52-week highs despite reporting a loss of $0.33 per share at its latest earnings release in May. The forward P/E is 60.45. However, numbers are improving from the prior year’s loss of $0.51 with kate spade sales up 22% for the quarter.
The high end tightrope
All three of these apparel companies have to walk a fine line of attracting the aspirational with their cachet and high prices, while still offering a lower price alternative. And they have to do this without falling into the “mass-market mire.”
I liked Fifth & Pacific better when I first wrote about it when it was some 100% lower, but it has a compelling turnaround story and that tier two line, Saturday, should show good numbers at the next earnings release. A sale of Juicy and Lucky would also boost the stock.
I always hesitate to recommend Michael Kors and yet it continues to surprise. This is still an “at your own risk” story. Coach seems oversold still. Coach continues to raise the yield and succession problems are solved now, so buy with my blessing.
AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Coach. The Motley Fool owns shares of Coach.
The article Is Mass-Market a Dirty Word for These Stocks? originally appeared on Fool.com and is written by AnnaLisa Kraft.
AnnaLisa is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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