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Coach Bags Kate Spade for 2.4 Billion

Coach just made a major power-play in their quest to re-brand. The company just bought Kate Spade for a whopping 2.4 Billion dollars.

There has been a significant bout of brand and designer roulette going on over the last few years. Most recently DKNY was sold to G-III Apparel group in January for $650 million dollars, while other brands embraced new designers like Dior‘s new designer Maria Grazia Chiuri.

It is understandable that Coach would come forward with such a power play since their days as a favorite brand with the young and fashionable crowd have dwindled.

There was a point in the early 2000’s when the Coach brand was one of the ‘It’ bags to have among tweens and teens. As the last decade and a half surged on, more high-end bags became the norm for younger age brackets. The designs, although classic seemed to lack the same luster as larger brands like Louis Vuitton, Gucci, and Prada.

Since then, they have been clamoring to find their new niche audience. Coach even enlisted the help of beautiful young actress Chloe Grace Moretz. Moretz who is the brand ambassador can be seen below rocking a gorgeous black and  Coach gown to the 2016 Met Gala, and also in the spring 2017 campaign.

cgm-met-galacoach-2017

 

Even with a young and beautiful actress as their ambassador/model the brand still hasn’t been making great strides even though they have updated their style. So, like any business trying to bring in a new audience, they started looking for an already established business with the consumer base they needed, Enter Kate Spade.

According to Reuters, 60% of Kate Spade’s customer base is made of Millenials. Coach plan on regaining the midrange luxury market by limiting the sale of Kate Spade to department stores, and limiting online discounts of the brand. Chief Executive of Coach Victor Luis seemed excited and hopeful about the new acquisition when speaking with 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.” – Victor Luis, Chief Exec. Coach

All we can do is see where this new partnership will take the two companies but, the merger already seems to be fruitful. On Monday, Coach’s stock was already up 5% at the end of day closing. That’s not too shabby for just announcing the deal.

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