Kate Spade expects full-year margins to decline; shares fall

Tue Aug 12, 2014 12:29pm EDT

Aug 12 (Reuters) - Handbag and accessory maker Kate Spade & Co warned gross margins for the year would fall as it faces increased competition and weak sales in its Kate Spade Saturday brand, sending its shares down as much as 23 percent.

The company said on a post-earnings conference call on Tuesday that it expects 2014 gross margins to decline 125-175 basis points from a year earlier.

Kate Spade Saturday sells apparel, handbags and jewelry at almost half the price than its upmarket kate spade new york brand.

The company also said it may take longer than expected to meet its goal of 25 percent EBITDA margin for the Kate Spade brands.

Kate Spade's shares initially rose to a seven-year-high of $42.87 in early trading after the company reported better-than-expected sales and profit for the second quarter ended July 5. (Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Saumyadeb Chakrabarty)

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