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In big shake-up, Kate Spade to close Saturday stores

Kate Spade announced Thursday it will shutter its Kate Spade Saturday and Jack Spade stores to focus on building its label into a $4 billion brand.

Both brands will continue to be a part of the luxury label's portfolio, with Kate Spade Saturday being folded into Kate Spade, and Jack Spade being sold at other retailers and online.

A Kate Spade Saturday handbag
Source: Kate Spade Saturday
A Kate Spade Saturday handbag

"A key tenet of our road map for growth is ensuring that we are disciplined and forward-looking with our investments, putting our resources behind targeted initiatives that will maximize profitability," CEO Craig Leavitt said.

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Kate Spade shares rose about 10 percent to near $33 in morning trading.

Saturday, which caters to a younger customer and has more modest price tags than the main Kate Spade label, had 19 locations; Jack Spade had 12.

Spade expects to incur charges of $32 million to $39 million due to the store closings.

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Kate Spade announced the shake-ups as it released preliminary results for 2014. For the year, the company expects to report a net sales increase of more than 40 percent from last year, to a range of $1.13 billion to $1.14 billion.

It anticipates adjusted earnings at $145 million to $150 million, including losses of $29 million from Kate Spade Saturday and the brick-and-mortar operations of Jack Spade. Thomson Reuters consensus estimates forecast Kate Spade will post EBITDA of $137 million for 2014.

"All told, with momentum building, the business focus narrowing and most major overhangs... now eliminated, we remain bullish on Kate shares," Sterne Agee analyst Ike Boruchow said.