Coach is set to acquire luxury brand Kate Spade in a $US 2.4 billion ($3.26 billion) deal in an attempt to diversify into the millennial market.
“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 Louis.
“The acquisition of Kate Spade is an important step in Coach’s evolution as a customer-focused, multi-brand organization. The combination enhances our position in the attractive global premium handbag and accessories, footwear and outerwear categories, bringing product, brand positioning and customer diversification to the portfolio.”
The deal is expected to close in the third quarter of 2017. The news sent Kate Spade shares up by almost 10 per cent, while Coach shares rose 5 per cent.
In the recent years, Coach has successfully recovered its brand by opening more stores abroad and offering fewer discounts, resulting in increasing profits and sales.