Kate Spade stock plunges 18% after lower outlook
Kate Spade's stock (KATE) plunged Wednesday after the retailer lowered its financial outlook for the year amid a deteriorating environment for luxury goods.
Shares of the New York-based handbag, clothing and jewelry chain closed down 18.2% to $16.47 after the company warned that it would post lower revenue and profit than it expected this year.
Among the reasons CEO Craig Leavitt blamed for the poor performance were "the retail landscape and continuing tourist headwinds."
That squares with a broader downturn that's rattling international shoppers, such as terrorism concerns, the United Kingdom's vote to leave the European Union and China's economic slowdown.
The S&P Global Luxury Index, which tracks 80 publicly traded companies in luxury goods or services, has fallen nearly 15% over the last 12 months.
Luxury retail traffic is down 20% from a year ago, The Luxury Institute CEO Milton Pedraza told Paste BN last month.
Kate Spade projected 2016 net sales of $1.37 billion to $1.4 billion, down from $1.385 billion to $1.41 billion. It projected adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $242 million to $260 million, down from $257 million to $282 million.
It predicted sales growth at stores open at least a year of "high single-digit to low double-digit," down from "low to mid-teen."
The company recorded second-quarter net sales of $320 million, up 13.7% from a year earlier, and net income of $26.8 million, more than triple the year-earlier quarter's $8.5 million profit.
But the retailer got help from the opening of 17 new stores during the quarter. It now has 426.
"As we navigate these broader industry trends, we remain very confident in our long-term growth initiatives and have a number of strategies in place to drive our business in the second half of 2016," Leavitt said in a statement. "We continue to focus on the factors we can control, executing our long-term strategy and continuing to grow as a global, multi-channel lifestyle brand."
Follow Paste BN reporter Nathan Bomey on Twitter @NathanBomey.