Coach Buys Kate Spade for $2.4 Billion

The rumors from Wall Street are finally confirmed. Coach, which offered $18.50 per share in cash for Kate Spade, bought the brand for a tremendous $2.4 billion. Coach agreed on a premium of 9 percent on the closing price on Friday, because of the millennial consumer base that Kate Spade has. Additionally, Coach is expecting to generate $50 million in savings in the next three years.

Both brands offer high-quality luxury products at relatively affordable prices. Coach’s story started back in 1961 when they were producing only wallets. With time they expanded and started to manufacture classic leather handbags that became the no.1 choice for both business women and full-time moms.

Photo Courtesy of Coach
Photo Courtesy of Coach

Kate Spade offers sharp, contemporary and at times edgy accessories predominantly worn by a younger consumer base. Lately, the company was trying to go back to their roots and remake themselves as a lifestyle brand. This was the main reason why Coach decided to buy the brand, hoping that the expansion of brands in their portfolio will help them overcome the challenges in the crowded market.

Kate Spade Store
Photo Courtesy of Kate Spade

Nowadays people are more oriented towards online shopping and fast-fashion brands such as H&M, Zara, Forever 21 and the like. Additionally, the outlet stores get most of the crowds that department stores had in the past. Coach and Kate Spade have way higher prices compared to fast-fashion brands, but they are still considered as a quality and affordable alternative to the haute couture fashion brands such as Gucci or Louis Vuitton. Coach’s handbags retail for $285 to $3,000 and Kate Spade’s sell for $100 to $500. Both companies offer men’s wear, fragrances, homeware and ready-to-wear fashion.

Coach’s department store revenue has fallen 40% in the last quarter as a result of heavy discounts and fewer shoppers. Additionally, the brand had to close a significant number of their department store locations. With the most recent deal with Kate Spade, Coach is hoping to target the market from all sides.

Coach’s CEO said in a press release that Kate Spade “has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials. Through this acquisition, we will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation.”

This February Coach officially made Selena Gomez the new face of the brand. The company’s decision was a bit surprising because their classic designs are predominantly worn by mature customers. It seems that lately Coach is aiming towards much younger costumers than their regular consumer base. Apparently, Kate Spade is the perfect way to reach their new goals.

Recent Posts

Model Sara Sampaio’s Pre-Victoria’s Secret Show Workout

The Victoria's Secret Show is one of the most demanding fashion shows. Besides the million-dollar budget meant to bring a unique experience to the brand's fans, the models are also here to flaunt their best...

Gorgeous Burgundy Celeb Makeup Looks

Burgundy is one of the most beautiful colors to use in makeup and fashion. We all love a vampy burgundy matte lip. Since celebrities love experimenting with new looks, they deliver new trends all the...

Inside Serena Williams’s Lavish Wedding

The greatest tennis superstar of all times Serena Williams and Reddit's co-founder Alexis Ohanian tied the knot on November 16 in New Orleans. As everyone expected, the couple prepared a fairytale-like opulent wedding. [caption id="attachment_92145"...

Shiniest PVC Pieces To Amp Up Your Style

This winter we go by the rule “more is more”. Dull outfits are reserved only for the ones who are afraid to experiment. But if you are into fashion and always want to look your best,...

Oscar de la Renta’s Wedding Dresses: Spring 2018

Oscar de la Renta’s bride is elegant, feminine and glamorous. For their first bridal collection as co-creative directors, Laura Kim and Fernando Garcia wanted to keep the recognizable spirit of the brand. They paid homage...