A couple of months ago, rumors were circulation that Michael Kors and Coach were interest in acquiring Kate Spade. Now, Coach is said to be announcing the acquisition of the brand in the next few days.
According to an article on Business of Fashion, Coach is said to be announcing the acquisition of New York brand Kate Spade in the next few days. Analysts have speculated that the brand could be purchased for as much as $2 billion.
This comes just a couple of months after rumors began circulating that both Coach and Michael Kors were intrested in acquiring the brand. There were also rumors that other luxury brands outside the U.S. we’re interested but it was never said which brands.
Kate Spade was also said to be having a formal auction. The brand didn’t have one but rumors kept circulating that the company would sell when the brand said it was “conducting a process to explore and evaluate strategic alternatives to further enhance shareholder value.” The company also said the brand’s looking at options may not result in a transaction.
In December, Kate Spade reportedly began working with a bank to see if other brands would be interested in buying it. Talk of possible acquisition “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,” according to an article on Bloomberg.
Handbag sales declined last year along with department store sales as customers are now shopping more online than in stores. Less spending by tourist has also made sales decline. As such, Coach has been lowering its inventory in department stores and looking for deals with other brands.
Coach, which recently acquired luxury shoe brand Stuart Weitzman, reportedly made several bids to buy Burberry in December. The bids, however, was rejected.
Kate Spade reported declining sales in late 2016 and said earnings would decline during the holiday season.
Both Coach and Kate Spade declined to comment.
So, what do you think? Will Coach acquire Kate Spade? Let me know in the comments below. Also, don’t forget to subscribe to get new posts sent directly to your inbox and follow me on Facebook, Instagram, and Snapchat.
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