Coach Gets Quirky With Kate Spade; Warren Buffett’s Latest Thoughts; It’s Kumbaya for Comcast and Charter Communications

Luxury quirk…

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Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

Coach is about to get a whole lot more accessorized now that it announced it will be buying Kate Spade. The $2.4 billion price tag on the deal means Coach will be plunking down $18.50 per share, which ends up being a 9% premium over Kate Spade’s Friday closing price. Analysts are digging the merger, thinking it’s a good fit and news of the deal set Wall Street tongues wagging, subsequently sending shares of both companies up.  In fact, ever since Kate Spade brass decided on a sale back in December, the stock has been on the rise. Which is weird because before that the stock was flagging over increased competition and decreased traffic and sales. Much of the enthusiasm over the sale is because people think Coach will have an opportunity to up its street cred with millennials. After all, Kate Spade’s quirky merchandise tends to resonate with that finicky demographic. And when something actually resonates with millennials, companies want in and are quick to figure out how to make a lot of money in that arena.  In fact, 60% of Kate Spade sales come from millennials while only 15% come from outside the U.S. Go figure.

It’s all about the tapeworm…

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Image courtesy of  Mnonchan/FreeDigitalPhotos.net

It was that time of year again where one of the wealthiest men in the world imparted his financial wisdom onto his shareholders, and also regular people. Sort of. At the annual Berkshire Hathaway meeting held in Omaha this past weekend, Warren Buffett and his partner, Charlie Munger, shared their isights on several topics including Wells Fargo, Amazon and even the Republican healthcare bill.  On Wells Fargo, Buffett said there were three huge mistakes, but the biggest one was not acting on the problem when they first heard about it. On the Republican healthcare bill, he shared this pearl: “Medical costs are the tapeworm of economic competitiveness.” Got it? Tapeworm. Also,  he messed up royally by not ever owning shares of Amazon.  He admits he never anticipated Jeff Bezos going as far as he did. Apparently Buffett’s oracle skills failed him on that one. On a different note, he said that if he dies tonight, he’s convinced shares of Berkshire Hathaway would go up tomorrow. Warms the heart now, doesn’t it.

Well isn’t this precious…

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Image courtesy of Witthaya Phonsawat/FreeDigitalPhotos.net

Comcast and Charter Communications are joining hands in the spirit of fighting against the dreaded and unflagging power of wireless carriers. Apparently when it comes to fighting wireless carriers, there is an inherent safety in numbers. So together the two companies will join hands and tackle such things as customer billing and device ordering systems. Also, they made a deal with each other that neither one would attempt to buy any other wireless companies and to consult one another before either one would make related deals,. They want to avoid increasing competition between the two companies. A move like this allows them to develop wireless services for their own companies without worrying over competition from each other. So its’s a little kumbaya and a little self-preservation.  And bonus: The two companies have said the plan could have the potential of lowering costs for its customers. However, that remains to be seen so don’t hold your breath.

 

Snap to it! Snap Inc. Banks on IPO; Canada Goose Wants to Keep NYSE Warm and Cozy; How Much Is That Handbag Company In the Window? Kate Spade Puts Itself On the Market

Next big thing?

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Image courtesy of zirconicusso/FreeDigitalPhotos.net

Looks like Snap Inc., the company that gave us Snapchat, is gearing up to be Wall Street’s next big IPO darling. Come March 1, the company is hoping to get an IPO valuation of between $19.5 – $22.2 billion, and is offering about 200 million shares on the New York Stock Exchange under the ticker symbol…wait for it…SNAP. You saw that one coming, didn’t you. It plans on pricing those shares between $14 to $16, which should bring in over $3 billion. The company already boasts 158 million active users and most of Snapchat’s money comes from advertisers. Revenues for the company came in this year at $404.4 million –  a far cry from 2015’s $58.6 million. However, one hurdle Snapchat might have to overcome is the perennial question of how it plans to make a profit. Sure it took in over $400 million in revenue last year, but it still also posted a $514 million loss.  In any case, before Snap Inc. makes its big Wall Street debut, top brass, including CEO Evan Spiegel, are set to hit the road, for a “road show,” – which is not as cool as it sounds – to visit investors in hopes of whetting their fiscal appetites on the potential of Snap Inc. stock. One hitch – and apparently there are more than a few – is that new shareholders won’t have any voting powers and instead will have to trust the board to know what they are doing in order to make tons of cash for the company.

What’s good for the goose…

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Image courtesy of MrWildLife/FreeDigitalPhotos.net

You don’t have to be Canadian to notice the swarms of people sporting the Canada Goose brand of winter gear. Chances are, if you’ve ever thought about buying one of those coats, you might have reconsidered after looking at the price tag.  But apparently more than enough people are buying the brand’s merchandise to warrant a $100 million IPO filing, and Canada Goose will list on the New York Stock Exchange under the ticker symbol…wait for it…GOOS. Didn’t see that one coming, did ya? Okay, you probably did. While that $100 million isn’t exactly screaming: “SNAPCHAT!” the fact is Canada Goose’s revenue grew close to 40% between 2014 and 216, with just its online sales hitting $33 million in 2016. By 2016, revenue for the company came in at over $290 million. You may not have bought one of their jackets, but chances are, with figures like, that you know someone who did. In fact, in the last three years in the United States, sales grew by 76%, and 33% in the last year, to total over $103 million. In Canada those numbers only grew by 15%. Go figure.  While Canada Goose still scored a $27 million profit on that $291 million revenue, it does still have a wee bit of debt to the tune of $278 million. So yeah, a few extra bucks from an IPO would do wonders.  Of course, you can’t file for an IPO just on the basis of a few jackets. With that in mind, Canada Goose has big plans to expand its product offerings from footwear to bedding and everything in between.

Up for grabs…

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Image courtesy of duron123/FreeDigitalPhotos.net

It was just a matter of time, I suppose, before Kate Spade threw in the fiscal towel and decided to put itself up for sale. Except, at Kate Spade, they’re calling it “exploring strategic alternatives.” However the company wants to spin it, it still heartened Wall Street which sent shares of the company up more than 13% for a change. To be fair, Kate Spade’s recent quarterly earnings weren’t even horrible.  In fact, the company took in a 39% increase in profit of $86 million on $471 million in revenues, missing estimates by just one million measly dollars. The handbag company even added 41 cents per share when just 34 cents were expected.  Shares are up over 20% for the year and sales of its merchandise in its own stores increased by over 9% . Its rivals, including Michael Kors  and Coach would have loved to see similar results themselves. But alas, for Kate Spade, China just wasn’t feeling the love while a strong dollar kept plenty of tourist shoppers at bay. And in our neck of the woods, consumers just aren’t buying handbags as much as in the past, which is quite the problem when your core product is just that.

Kate Spade Shares Stylin’ on Latest Reports; Sears Has a Fiscal Guardian Angel; Amazon Dismisses Gravity With Latest Patent

I’m so fancy…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Kate Spade wants to put itself up for grabs and that news sent its shares up 23%, giving Wall Street plenty of cause to celebrate. And the Street will take whatever it can get, especially since Kate Spade was down 9% just in the last six months. In fact, similar companies including Michael Kors and Coach have also experienced declines during the same time period. But the kicker is that both of those companies, along with four others, are being bandied about as potential buyers of Kate Spade. Talk of a potential sale is just what hedge fund Caerus Investors wants to hear. While the firm, which entered the picture back in 2009, hasn’t disclosed its exact stake in the company, it did send a letter to Kate Spade’s board back in November urging it to put itself on the auction block. And that’s exactly what’s planned for next month. With a market cap of $2.3 billion, Caerus thinks Kate Spade could get picked up for a nifty premium – between $21 to $23 per share -and naturally, Caerus stands to profit from that. But that wasn’t the only story to come out of Kate Spade today. Apparently, an options trader purchased 2,000 calls for Kate Spade shares just minutes before it was reported that it’s exploring a sale. A call, by the way, allows a buyer to score shares at a pre-agreed upon price. Not only was one very lucky buyer involved, but it also netted a very shrewd trader a cool $320,000 within minutes. Insider info? Hmmm. I’m sure the SEC would like to know. Because that would be so bad. Just ask Martha Stewart. As for Kate Spade, she hasn’t been part of the company since 2006.

On a another note…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Even though its stock just went up 9% – the most in two months – Wall Street definitely does not feel the same amount of love for Sears as it does for Kate Spade. The stock closed at a 52 week low just yesterday and its planning to close 30 more Sears and Kmart stores in early 2017. But there is someone who seems to love the embattled retailer unconditionally: CEO Eddie Lampert, who said he’s going to get a $200 million letter of credit for the troubled company. In fact, he has so much faith in the company  – and apparently he’s the only one who does – that he thinks that letter of credit could grow to $500 million. This is not Lampert’s first “loan” to Sears. In the last two years he’s shelled out over $800 million to the company.  Talk about faith.  At least this loan comes with guarantees that if Sears goes bust, its suppliers will still get paid. I wonder if the rest of his hedge fund buds over at ESL Investments feel the same, even as the firm continues to back Sears? For some inexplicable reason, Lampert is devoted to Sears, despite the fact that its sales are constantly going down and it has already lost billions. Most investors think the time has come to throw in the retail towel.  But not Lampert, who in addition to being Sears’s CEO and biggest cheerleader for the last four years, also happens to be its biggest investor.  However, others only see red flags and are wondering why Lampert is the only one eager to throw money at a company which has been losing so much of it in so little time.  Sears’s last quarter lost $750 million, so much worse than last year at this time when it only lost $454 million. Revenue fell a whopping 13% to $5 billion. In fact, in the last eight years, Sears has lost around $9 billion. Also, with the seeming exception of Lampert, everyone is wondering why Sears would need money right after the holiday season, which is supposed to be the most lucrative quarter out of the whole year.

Yeah, they thought of that too…

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Image courtesy of vectorolie/FreeDigitalPhotos.net

Because fulfillment centers weren’t enough, now the e-commerce giant is looking to do away with gravity – besides logistics companies – with its latest patent for an airborne fulfillment center (AFC). It’s exactly what it sounds like – a warehouse in the sky. Flying at a lofty 45,000 feet, drones would basically zoom into the warehouse, pick up items that were ordered and then deliver them.  The company’s ramped up its drone tech efforts and this latest project fits in nicely with that initiative.  Right now Amazon drone delivery requires that Amazon build warehouses in specific areas, on land, where drones can happily roam free and deliver items to customers. Some of the uses mentioned in the filing include fulfilling orders during football games. The AFC would be stocked ahead of time with certain game “essentials” that could be easily delivered as you cheer for your favorite team. Another idea would be to allow customers to order right from a giant ad board and have their items delivered “within minutes.” But before you start having nightmares of flying robotic insects whizzing all around you, Amazon is going to need to get major regulatory approval from aviation authorities before launching any airships.

Samsung Looks to Erase its Mistakes; A Not-So-New Chapter for American Apparel; Hedge Fund to Kate Spade: Sell off!

Exploding cell phones need not apply…

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Image courtesy of Pansa/FreeDigitalPhotos.net

There were no over-heating phones in sight as Samsung plunked down $8 billion to acquire Connecticut-based Harman International Industries. In case you have no idea who – or what – Harman is, it’s a company best-known for making premium audio systems for cars. But that’s not all. The company also makes plenty of other hardware for vehicles to connect, which makes it a very good fit for Samsung, as there will be very little overlap. Its products can be found in over 30 million vehicles, including BMW, Toyota and Volkswagen. This acquisition is an excellent opportunity for Samsung to break into the automotive industry where it barely exists. For now, anyway. It will also give the South Korean company a strong foothold in a rapidly growing industry that is expected to experience major growth in the next ten years. And who doesn’t like massive growth, right? By the way, this is the biggest overseas acquisition by a South Korean company. Ever. Samsung is paying roughly $112 per share, a 28% premium to Friday’s closing price.

The final chapter?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

American Apparel is filing for chapter 11 bankruptcy protection. Again. For the second time in a year. After just exiting that protection in February. To be cute, some people call it Chapter 22 because it’s the second time it happened. Get it? Hilarious. In any case, I’m pretty sure American Apparel did set some type of record for earning its second bankruptcy in twelve months. The apparel company will be picked up by Canadian company Gildan Activewear for the bargain price of $66 million. If you recall – and it’s okay if you don’t – American Apparel, arguably best known for its racy ads, first filed for bankruptcy protection back in October 2015, roughly a year after it ousted founder and CEO Dov Charney for a litany of sexual harrassment problems. Charney, who said that the company had been taken from him in a coup, did try to regain control of his company only to have a court put the kibosh on his attempts. Later on, CEO Paula Schneider left after failing to turn the company around. The company, which went from 230 stores down to 110, saw a 33% decline in year over year sales, has $215 million in debt, tons of legal bills courtesy of Dov Charney and took in only $497 million in net sales for 2015. American Apparel will continue to run its normal U.S. operations though, the stores will eventually be put on the auction block. In the meantime, its stores across the pond have already started to experience the trauma and drama of liquidation.

Bag it…

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Image courtesy of lekkyjustdoit/FreeDigitalPhotos.net

Kate Spade is not feeling the love from hedge fund Caerus Investors, who whipped out a letter today asking, or rather urging, the lifestyle brand to sell itself. What Caerus neglected to mention in that letter was what it plans to do should such a sale occur. As for Caerus’ stake in Kate Spade, well, if you find out what it is, feel free to share that information as no one seems to know for sure. In any case, Caerus, according to its letter, has become “increasingly frustrated” with Kate Spade brass who have yet to make the company churn out a profit that would be on par with other companies like it.  Caerus doesn’t care for Kate Spade’s profit margins either, which are apparently lower than its peers, besides the fact that its stock also trades at a discount to other companies in the same category. There is something to be said for Caerus’s “frustration” seeing as how there was a whopping 63% decline since Kate Spade’s intraday high back in August of 2014.  Add that to the fact that Kate Spade’s third quarter revenue missed estimates and the stock is down 7% for the year and maybe you might be wondering if Caerus might be onto something. But then, lo and behold, Jana Partners announced that it owns a hefty .85% stake in Kate Spade, which conveniently sent shares up to $17.80 and gave it a very generous $2.28 billion valuation.  So maybe the answer to Caerus’ issues with Kate Spade lays in Jana Partners stake.

The List of all Lists; Kate Spade’s Numbers Need to Get Accessorized; GoPro Goes Big With Latest Acquisitions

A-listers…

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Image courtesy of iosphere/FreeDigitalPhotos.net

Forbes unleashed its latest list of the world’s richest people just in time to make you feel really bad about yourself. 1,810 billionaires made the list and their combined net worth is a mind-blowing $6.48 trillion. But don’t be too impressed since that figure is actually $580 billion less than it was last year. Hey, times are tough. There are 16 less billionaires this year and 540 of them are living large in the United States. The gender gap managed to rear its ugly face on this list as only 190 women made the cut, with 65 here in the United States. Unfortunately that figure was down from 197 last year. Heiress and L’Oreal businesswoman Lilliane Bettencourt is the highest ranked woman, taking the 11th spot with a net worth of $36.1 billion. For the third year in a row, Bill Gates is sitting pretty at the top with a net worth of $75 billion. However, to be fair, he is $4.2 billion poorer than he was last year. My heart aches for him, really. Like Zara clothing? Apparently most people do since its owner, Amancio Ortega, ranks in the number two spot. Warren Buffett, no surprise, takes third while Carlos Slim snags the fourth spot. Facebook’s 31 year old Mark Zuckerberg took the sixth spot with his $44.6 billion and becomes the youngest billionaire in the top ten. Lucky him. And whether you love him or hate him, Donald Trump did make the list with an estimated net worth of $4.5 billion.

Accessorized…

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Image courtesy of iosphere/FreeDigitalPhotos.net

Kate Spade almost fell out of fashion on Wall Street today when the company reported that its fourth quarter sales fell short, coming in at $62 million and adding 32 cents per share. The company missed estimates by a penny and posted a 51% decline from last year  when the company saw $126 million with 49 cents added per share.  At least its revenue was up 7.6% to $429 million, although analysts did expect that number to ring in closer to $442 million. Oh well. Maybe next quarter. Yet, Kate Spade shares rose as high as 6.7% today. And why shouldn’t they? After all, the swaggy design house is expanding its merchandise into home decor and children’s apparel, prospects that have Wall Street tongues wagging, if ever so slightly. The company has had quite the quirky fiscal ride as it was down a staggering 42% for the last twelve months yet managed to creep up 12% since the beginning of the year. That was happening even while the almighty S&P was going down 5.5%.  Go figure.

Pro-active…

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Image courtesy of iosphere/FreeDigitalPhotos.net

What to do when your company takes a vicious downward spiral killing 70% of its value? You go shopping, of course. And that’s exactly what GoPro Inc. CEO Nicholas Woodman did. The action-camera exec announced he is plunking down $105 million to buy not one, but two video editing applications, in hopes of beefing up one of the company’s bigger problem areas.  Wall Street responded kindly by sending shares up and let’s face it, GoPro shares need all the help they can get. GoPro’s acquisitions are Replay and Splice, applications that will allow users the ability to easily cut and publish footage on their mobile phones. Given that Woodman himself called he GoPro editing experience an “inconvenience,” these acquisitions seem like a prudent move. Too bad, however, that this move comes on the heels of GoPro’s decision last month to cut 7% of its workforce after weak holiday sales and slashing the price of its newest camera by 50%. That’s what happens when you’re staring into a crowded market of action-cameras. But, taking a page from Warren Buffett, Woodman is optimistic that 2016 will be a record year for GoPro. Let’s hope so since 2015 saw GoPro’s stock hit an all-time low.

Bling it On: Tiffany’s Earnings Shine; Michael Kors Earnings Do Not Shine: Did Someone Say Snapchat IPO? Sort of.

You paid how much?!

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Shares of Tiffany & Co. shot up over 12% to $95.68 – the most in almost six years and, well, why not? After all the high-end bling company scored some epic digits in its latest earnings report, proving once again that people really do like expensive jewelry. I mean, was it ever even a question? Even though the declining euro against the dollar seems to be messing with everybody else’s earnings Tiffany & Co. seemed to emerge from the quarter virtually unscathed. Sadly, I was not the recipient of any high-end Tiffany & Co. pieces lately, but plenty of other lucky consumers were as it was the high-end collections that drove sales for the luxury retailer this past quarter. Those pricey accessories took in $962.4 million in revenue, with profits of $104.9 million and 81 cents per share. Analysts only predicted 69 cents per share. Sort of impressive, except that last year Tiffany & Co. pulled down $1 billion in revenue with $125.6 million in profits and 97 cents per share. Those shares, by the way, are down 20% for the year. But considering that the company just increased its forecast, those stock prices might be making a comeback.

Going down down down…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Unfortunately for Michael Kors, his fashion company took a nasty beating over the declining euro. But it wouldn’t be right to blame all the company’s bad earnings on the strong dollar as other factors also caused the company’s stock to plunge. While it may be hard to believe, it was just a few months ago that the stock hit an all time high of $97.60. Today, however, the stock is teetering at just under $46, its lowest point since December 2012 when it first made its IPO. Besides the strong dollar, same store sales were down a very uncool 6%. That may not seem like such a big deal but for Michael Kors it’s huge, especially when you take into consideration that the retailer also reduced its earrings outlook. Coach and Kate Spade are definitely giving Michael Kors an unwelcome run for its money, as well. When the dismal earnings for Michael Kors were announced, though, those two companies also saw their shares take a beating, as investors wondered whether bad earnings for fashion companies would be trending. Another culprit behind Kors’ earnings was Apple. No joke. While accessories tend to be hot sellers and profit drivers for companies like Michael Kors, the Apple watch is putting a major chink in those sales. After all, if you’re already spending that kind of cash on your wrist, why not have an Apple watch perched there?

Bubble burster…

Image courtesy of arztsamui/FreeDigitalPhotos.net

Image courtesy of arztsamui/FreeDigitalPhotos.net

Is there an IPO on the horizon for messaging app Snapchat? Maybe. Except CEO Evan Spiegel declined to elaborate on some key details during an interview with Re/code’s Kara Swisher and Walt Mossberg. For instance, the 24 year old founder wouldn’t even drop an itty bitty hint as to when Snapchat might make its big ticker debut. Speigel also dished out his thoughts on several other topics including his feelings that our current tech bubble is going to burst. Which is informative and all but really, when’s this Snapchat IPO coming at us? With 100 million users sending out around 700 million pics a day, the company has picked up funding and is valued at around $10 billion to $15 billion – depending on whom you ask, of course. But about that Snapchat IPO…

Tesla’s Earnings Are Charged; Whole Foods Surprises; Posh Earnings for Kate Spade

It’s electric…

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Tesla investors are squealing with energy efficient delight today as the electric car company released third quarter earnings that beat the Street. Perhaps you might have noticed a few more Model S cars tooling around your neighborhood? Well it’s no coincidence that Tesla set a delivery record for those fabulously, environmentally-friendly automobiles. Expect to see even more of them as CEO Elon Musk plans to ship out 50,000 Model S cars in 2015. In fact, just in this quarter alone, Tesla whisked off over 7,800 cars to new owners – over 41% more than last year at this time. Unfortunately, the company didn’t fare so well on its net loss – a whopping $75 million. However, the company blames stuff like the costs involved in opening stores in Asia, not to mention all those pesky fees for research on its upcoming SUV. Analysts predicted Tesla would lose a penny a share. But wouldn’t you know it – it raked in $0.02 per share instead. Analysts also predicted revenues of $892 million but were foiled once again as the company posted $932 million in revenue.

Whole-Y organic cow…

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

It wasn’t the best quarter, or year, for that matter, for Whole Foods. After all, having to compete against mainstream supermarkets that offer up organic fare for so much less is…hard. But it looks like the grocery chain did okay, after all, seeing as how it reported a 5.8% profit increase in its quarterly report. Perhaps it’s those touching, poignant commercials that have caught your organic eye. Or maybe you enjoy the perks from the Whole Foods customer loyalty program (who wouldn’t?). The company also put the spotlight on value and its attempt to lower prices. That profit spike was also probably helped by its tech offerings like Instacart and the Apple Pay option. Whatever it was, the green green grocer managed to bag a $128 million, $0.35 per share profit from its 360+ stores. There was only one not-so-slight problem: Whole Foods had its lowest growth rate in four years.

Now that’s pretty…

Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

Nothing says fashionable like a 30% rise in sales. Which must make Kate Spade & Co. very posh indeed. Especially because those surprisingly fashon-forward numbers came after the company said its margins would likely be an “issue.” The trendy label even saw shares climb 10% in pre-market trading today. All while fellow fashion companies and competitors Michael Kors and Coach have been seeing numbers that would make even the most durable fabrics want to shrivel up into nowhere. So what gives? Well for one thing, at Kate Spade promotions are out, for now anyways. What is in are theme-driven sales. You might not care for the lack of promotions not being offered but it’s certainly working for Kate Spade’s numbers. The company earned $0.02 per share  with net sales up 36% to over $250 million. To be fair though, analysts did expect $4 million more. But that might change now that it is teaming up with the Gap. The company has 98 stores and 57 outlets. Kate Spade is hoping it can double its sales by the end of 2016 to $2 billion (aren’t we all?).