Coach acquires Kate Spade for $2.4 billion
The company believes that it can "unlock Kate Spade's largely untapped global growth potential"
Luxury brand Coach has bought over Kate Spade for US$2.4 billion in its latest bid to appeal to millennials and accelerate its brand growth. The company, which offered US$18.50 per share in cash to Kate Spade shareholders, said it expects about US$50 million in savings from the deal within three years.
The move to acquire Kate Spade stemmed mostly from the decreasing amount of customers who are willing to purchase Coach products at full price. "Coach stuff was just so ubiquitous, and the brand had become a bit devalued, and no one wanted to pay full price for it," said Neil Saunders, a retail analyst with GlobalData Retail, a research firm.
"The acquisition of Kate Spade is an important step in Coach's evolution as a customer-focused, multi-brand organisation," Victor Luis, chief executive of Coach said. "We believe Coach's extensive experience in opening and operating specialty retail stores globally, and brand building in international markets, can unlock Kate Spade's largely untapped global growth potential."
Luis also told Reuters: "We are very excited that Kate Spade has strength with the millennial consumer, we see that not only through their sales but their online engagement."
Coach's decision to buy Kate Spade follows its successful acquisition of designer shoe company, Stuart Weitzman in 2015, for which it paid US$574 million.