GARY ON THE KATE SPADE EARNINGS DEBACLE!

Most of you probably haven’t heard of Kate Spade, but they are apparel and accessories. It’s Liz Claiborne, Juicy Couture and Lucky Brand. I have been watching the stock for a while. Why? Because it is trading up near the tips, the tips near the highs. We waited to see what earnings will do. So, the stock closed yesterday at $38.87. And then they reported, and the numbers looked pretty darn good. It opened up at $40.83 from $38.87, two bucks. By ten o’clock it was $42.86 up a nice 11%. And it constituted at that time what I consider to be a decent breakaway gap out of range. Well…it finished down $9.87 to $29 on 52 million shares. Its average daily volume is only 1.5 million. It traded half the float on the sell down. So, what happened? ‘Gary, you like buying high volume breakouts off of good numbers on earnings. Why not Kate Spade?’ Well, this is a very good question. This takes me into my little lesson.

Kate Spade had not had their conference call. We are very careful about not getting in front of conference calls. Kate Spade handled the whole earnings horribly. They came out with earnings and had other material information that would have affected the stock negatively and held off until the stock was already opened. People were making money, people were excited and then oops, guidance is not so good. If I am an investor in Kate Spade and I got my you know what kicked in, I am suing them. This is a lawsuit. I am not a litigious guy, but this is a lawsuit. Withholding material information, especially negative information, while the stock is trading up on supposed good news, would be shirking their fiduciary responsibility of full and fair disclosure. But, the lesson in all of this is simplistic. Wait for the conference call because you never know if what they will say will affect the things that go on with the stock and it turns right back around. And, by the way, that goes for the upside too.