May 9, 2017
Coach is acquiring rival Kate Spade for $2.4 billion in an effort to build a multi-brand conglomerate. The move brings a brand known for “bright, girlie” products together under the American fashion house known for high-end accessories, which also happens to have a massive store network.
Kate Spade has 133 specialty stores, 82 outlet locations and 54 foreign market franchises. Coach operates 1,037 stores globally.
Coach believes its experience in the specialty retail sector and international branding will aid in expanding the Kate Spade brand into new global markets. Coach offered a premium of 9% on Kate Spade’s Friday stock closing price. The deal is expected to close in the third quarter.
Coach, a pioneer in selling luxury handbags at relatively affordable prices, has struggled to maintain that success. The company initiated an ambitious turnaround plan in 2013 that included a new leadership and design team, as well as closing or renovating stores and instituting a new pricing strategy.
Coach believes its recently reported better-than-expected earnings signals the strategy is working.
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