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Kate Spade stock falls on sales growth concerns

Published on NewsOK Modified: August 12, 2014 at 12:55 pm •  Published: August 12, 2014

NEW YORK (AP) — Kate Spade & Co.'s second-quarter loss narrowed as the clothing, handbag and accessories company's adjusted profit and revenue topped analysts' expectations. But worries about slowing sales growth sent its shares sharply lower in afternoon trading Tuesday.

In a conference call, Chief Financial Officer and Chief Operating Officer George Carrara said that the company's comparable sales growth for the second half of the year is expected to be in the high single-digit range compared with an almost 30 percent increase in the first half of the year.

Carrara cited several factors, including the impact of some store relocations, an extra week in the first half, the shift of July 4 sales out of the second half and a planned pullback in surprise sales in the third and fourth-quarters.

Carrara also said that Kate Spade anticipates its full-year gross margin rate falling about 125 to 175 basis points due to a more promotional retail environment and sluggishness of its Kate Spade Saturday brand. The executive said that the company is considering putting off its profit margin targets for 2016 until 2017 because of the longer-than-expected ramp up of the Saturday brand, its revised 2014 margin rate guidance and limited visibility into 2016.

Shares of Kate Spade tumbled $8.94, or 23 percent, to $29.93 in afternoon trading after rising as high as $42.87 earlier in the day.

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