IB Net Payout Yields Model

After a Juicy Sell, Is Fifth & Pacific Worth More?

Anybody following Fifth & Pacific (NYSE: FNP  ) knows the stock trades based on the prospects of the fast-growing Kate Spade brand. Not surprisingly, the company recently unloaded the Juicy Couture brand to focus on further growing Kate Spade. The deal was for what appears to be a sizable discount, and Lucky Brands could be next. Will this streamlining of Fifth & Pacific into solely Kate Spade provide more value, or did management sell Juicy at a pittance to the detriment of long-term shareholders?

Back in 2012, the three brands had roughly equal sales, but the success of Kate Spade offered greater potential. Also, the recent success and valuation of Michael Kors (NYSE: KORS  ) and the past success of Coach (NYSE: COH  ) encouraged a focus on Kate Spade. At the same time, though, both Juicy Couture and Lucky Brands provided the potential for major turnarounds. Unfortunately, as 2013 has progressed, the secondary brands haven't developed back into winners, while Kate Spade continues to explode. In the latest quarter, Kate Spade generated $167 million in sales, far outpacing the $109 million of the second biggest brand, Lucky.

Read the full article here.

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