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Buckingham Defends Kate Spade, Says Macy's CEO Handbag Comments Are 'Irrelevant'

Buckingham Research Group's Scott Krasik "reiterated" Kate Spade & Co KATE 1.13%'s Buy Rating and $31.00 price target. This support came after Kate Spade cut FY16 sales and EPS guidance Wednesday, which pushed the price down 16 percent.

Krasik said the "pullback offers [an] attractive buying opportunity" as he argued "KATE's brand momentum trumps whatever overall retail malaise we are experiencing." After reporting 1Q16 results including an increase of 19 percent in same-store sales, Krasik thinks KATE's brand momentum is "clearly demonstrated" and expected to continue.

One of the Best Growth Stories in Retail

After Macy's, Inc. M 0.54% missed earnings Wednesday, Kate Spade fell with the retail sector leader, but Krasik thinks Kate Spade's fall was unwarranted. Macy's negative handbag comments "is mostly irrelevant for Kate over the near to medium term" due to various reasons. These reasons include:

  • Low exposure to the mid-tier department store channel
  • Tourism remaining positive for Kate Spade
  • Recent flash sale activity planned with Zulily and Hautelook/Rack
May 2016CitigroupMaintainsBuy
May 2016Goldman SachsMaintainsNeutral
Feb 2016BarclaysMaintainsOverweight

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