Kate Spade & Co. has been making headlines over the past several months for allegedly attracting interest from fellow fashion brands, including Coach (pictured above) and Michael Kors, as well as other brands outside of the U.S. Per Retail Dive, New York-based Coach is be ready to buy Kate Spade & Co., with a deal to be announced as soon as the next few days. Both companies declined to comment, according to the report, but analysts have speculated the price tag could top $2 billion.
As of December, Spade – a brand best known for its “accessible luxury” handbags and accessories – began working with a bank to gauge interest among possible buyers. Bloomberg noted at the time, “Talk of potential acquisitions has swept the luxury industry in the past year as designers look for ways to overcome sluggish mall sales, markdowns from excess inventory and fewer purchases from tourists.”
Sales of handbags have weakened over the past year in the U.S., as consumers are abandoning department stores in favor of online shopping. Lower spending by tourists, due to a strong dollar, has also hurt sales. In response, affordable luxury handbag makers, such as Coach and Michael Kors (two of Kate Spade’s biggest competitors), are inching out of department stores and exploring deals with other brands. Coach, for instance, which acquired footwear brand Stuart Weitzman in January 2015, recently made multiple takeover offers for British luxury brand Burberry but was rejected, the Financial Times reported recently.
Kate Spade reported lower-than-expected quarterly same-store sales in late 2016 and said pricing competition would likely dampen earnings during the holiday shopping quarter. Spade, herself, who founded the company in January 1993, left in 2007 when the brand was acquired by Liz Claiborne in 2007 for $125 million. She has since launched a new footwear and handbag company, entitled, Frances Valentine.