Light Luxury Brands Embrace Coach24 Billion To Acquire Kate Spade

Luxury retailers in the US

Recently announced the acquisition of light luxury brand KateSpade with us $2 billion 400 million, and will create a leading multi brand lifestyle company after the merger. According to the terms of the paction, Coach will purchase KateSpade&Company with us $18.50 cash and total paction amount of US $2 billion 400 million. The whole paction is expected to be completed in the third quarter of this year.

The paction price is 27.5% higher than the closing price of KateSpade before December 27, 2016.

According to the financial report, the number of KateSpade stores in China is only more than 30 now, while the number of Coach stores is close to 200.

In an interview, reporters learned that the industry's view is that the meaning of Coach's acquisition of KateSpade lies in its desire to expand its brand of different styles based on its own brand and achieve multi brand operation.

KateSpade was founded in 1993 in New York. Its biggest feature is the young consumer group born before and after 2000 (also known as the millennial generation) as the main customer. Therefore, most of the products in the color selection are lively and bright colors, and the positioning is younger and innovative.

At present, KS already has a group of young consumers with strong purchasing power. By constantly interpreting the millennial generation's ever-changing demand for fashion, it constantly updates the product design. In the past two years, especially in the handbag design, it has adopted interesting design models such as fruits, cars and animals. This brand has made a clear distinction between the brand and its competitors in the market, which is greatly favored by young consumers.

Wu Xiaoyu, an analyst with Tianfeng securities, believes that Coach's acquisition of KS is mainly based on many factors. The analysis shows that the biggest intention of Coach's acquisition of KateSpade is to develop more brands with different styles on the basis of its own brand, to achieve multi brand operation and to cover different consumer groups wider.

As we all know, the main consumers of Coach are mature women and products are aging. Although Coach has achieved great breakthroughs in product pformation in recent two years, the pformation of brand image into consumers' hearts is not realized overnight.

The characteristics of KateSpade are candy color, sweetness and maiden style, which are in sharp contrast with the consistent design style of Coach. Therefore, the two have obvious synergy. Acquisition of Katepade is also a signal to Coach that the outside world shows its positive change in product and design.

In addition, KateSpade has begun to expand its business in bedding and kitchen utensils in recent years. This will help Coach improve its brand's overall coverage in different markets. Acquisition of KS is a major step for Coach to take the strategy of multi brand and multi category layout and create light luxury empire; enhance supply chain management, control costs, and learn KS brand licensing experience.

KateSpade has a wide range of franchises, which are not Coach.

Through the acquisition of KS, Coach can learn from it, learn from each other's weaknesses, learn how to better manage and achieve synergy under multi brand and multi category strategy.

In addition, the acquisition of KS can enhance supply chain management capabilities and control cost effectively and coordinate factories.

Wu Xiaoyu introduced that as Coach design failed to keep up with the trend of the trend, aging products, and constantly rising new stars (including KS, ToryBurch, MichaelKors and other light luxury brands) constantly squeezing the market, Coach gradually lost competitiveness.

Therefore, in the past 10 years, Coach has been in the shadow of declining sales, but Coach has been seeking breakthroughs in recent years. In 2014, VoctorLuis became the new CEO of Coach group and carried out a series of "blood exchange reform" for the brand.

According to reports, in December 2016, Coach attempted to acquire over 20 billion dollars in Britain.

Burberry, but this acquisition plan was rejected by Burberry, and ultimately failed to win the brand. At present, rumors about the planned acquisition of JimmyChoo, although the progress is not yet clear, is enough to explain the determination of Coach's multi brand and multi category collectivization development.

On the one hand, according to the third quarter 2016 earnings report, Coach currently has 1 billion 800 million cash and sufficient liquidity on the account. If Coach has big takeover actions this year, these will be favorable factors for M & A activities.

On the other hand, the luxury industry will gradually pick up in 2017, which will be a good time for Coach to implement multi brand and multi category collectivization strategy.

In recent years, Coach products have been successfully reversed, especially the Swagger handbags launched in 2015.

In addition, Coach is expanding actively, aiming to become a variety of garments, shoes, handbags and so on.

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In Wu Xiaoyu's view, it is easy to find out that Coach will flourish and die. It is easy to find that if you want to maintain brand vitality, the product will always be a king. Continuous product innovation can inject fresh blood into the brand.

In addition, the multi brand and multi category group operation will become a trend. As a result of its own strength, the new brand will have greater cost and risk. Therefore, the domestic high-end clothing brand operators can follow these international groups, and acquire the synergy brand with their own brands to expand the product line and expand the consumer groups through acquisition.

For more information, please pay attention to the world clothing shoe and hat net information report.