Kate Spade & Co., the handbag maker that’s expanding into other product lines, rose the most in eight months after an analyst at Cleveland Research Co. recommended buying the shares because of the brand’s growth potential.
Consumers are becoming increasingly aware of Kate Spade, which may be in the “early-to-mid” stages of its growth cycle, Matthew Delly, a Cleveland Research analyst, wrote in a note to clients on Thursday.
Kate Spade has a “meaningful growth runway over the next several years and appears well positioned to utilize multiple distribution channels to engage the consumer,” Delly said.
Chief Executive Officer Craig Leavitt has set a goal of almost quadrupling Kate Spade’s sales to $4 billion by expanding into fragrances, jewelry, watches and sunglasses in the mold of brands such as Ralph Lauren. Sales at the New York-based company rose 42 percent to $1.14 billion in the year through Jan. 3.
The shares rose 11 percent to $22.25 at the close in New York, the biggest one-day gain since Nov. 6. Kate Spade has slid 30 percent this year.