Kate Spade's colorful style has attracted not only millennial shoppers, but also the devotion of another iconic brand. Coach announced today that they have acquired the fellow New York based company in a cash deal of $2.4 billion.
"Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials," said Coach CEO Victor Luis in a statement. "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."
Kate Spade has certainly innovated in the fashion space, then going on to expand into home and finally furniture just a couple years ago. They've tried out kitchen accessories and yogawear, and just last month the brand launched 70 colorful pieces of wall décor. Though not all of those risks have paid off; two years ago, the brand shuttered all of its men's fashion focused Jack Spade stores, as well as their more affordable brand, Saturday.
According to the Wall Street Journal, reports have been flying around for months that Coach was looking to snatch up the fellow accessories brand. Though it's not the first time they've bought a rival company; Coach purchased luxury shoe and accessories brand Stuart Weitzman for $574 million just two years ago.
Coach "is focused on preserving Kate Spade's brand independence as well as retaining key talent, ensuring a smooth transition to Coach, Inc.'s ownership," the company announced in a press release this morning.
They also said that, similarly to what they've done with their namesake brand, they'll reduce wholesale to discount stores and online flash sale sites to "protect profit margins and stave off the cheapening of the brand," as Fortune puts it. So far, the strategy has worked for Coach; they've recently reported a fourth straight quarter of rising sales.
There was no specific mention of how Coach will manage Kate Spade's furniture and décor lines, so we'll have to wait and see.