NEW YORK — Kate Spade has finally found a new home.
Liz Claiborne Inc. will announce today that it has acquired Kate Spade from Neiman Marcus Group for $125 million, according to sources involved in the deal. The transaction will close in the fourth quarter of this year, the sources said.
This confirms a WWD report on Nov. 2.
The $4.8 billion Claiborne is expected to reenergize the 13-year-old accessories brand and apply similar growth strategies to Kate Spade as it has with Juicy Couture and Lucky Brand Jeans. That would entail opening retail stores and expanding its wholesale distribution network. Beginning this year, Juicy plans to open 20 stores a year; the brand’s 20th store will open in San Francisco at the end of this week.
In addition, sources said Claiborne would seek product extensions for Kate Spade, such as sportswear and jewelry, to further accelerate the brand’s growth.
The sources said Claiborne believes Kate Spade has global potential and seeks to open up to 200 stores in the U.S., Canada, Europe, Asia and the Middle East. Kate Spade presently has 19 stores in the U.S., four outlet stores and one Jack Spade store.
Liz Claiborne Group president Susan Davidson and Liz Claiborne Brands Accessories president Dina M. Battipaglia are expected to be charged with running the newly acquired business.
Spade, the New York-based accessories firm founded in 1993 by husband-and-wife team Kate and Andy Spade, and two other partners, Pamela Bell and Elyce Arons, was put on the market by Neiman Marcus Group in September 2005.
Neiman Marcus acquired a 56 percent stake in Spade in 1999 for $33.6 million from Alex Noel Inc. Texas Pacific Group and Warburg Pincus LLC, two equity firms, bought NMG for $5.1 billion in May 2005.
On Thursday, Neiman’s said in a filing with the Securities and Exchange Commission that it would purchase the remaining 44 percent from Kate and Andy Spade, Bell and Arons, for $59 million.
WWD has learned that Kate and Andy Spade have signed a service agreement, keeping them on board in their respective roles as designer and chief executive officer until mid-2007. Claiborne is said to want to keep Kate Spade on board as the face of the brand. It is not known what Andy Spade’s position will be after the service agreement comes to an end. He declined to comment Tuesday.
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Kate Spade originated with signature utilitarian nylon bags bearing a simple black-and-white logo. Since then, the brand has ventured into such categories as footwear, eyewear, stationery and home products.
The firm’s collections are sold at stores such as Bloomingdale’s, Saks Fifth Avenue, Nordstrom, Neiman Marcus and Bergdorf Goodman.
Kate Spade and Jack Spade — the company’s men’s accessory brand — generated approximately $84 million in net sales for the 12 months ended July 30.
Industry sources have criticized Kate Spade in recent seasons for deviating from its signature in handbag designs and raising prices. Spade is said to be in the process of lowering prices and getting the business back on track, while Claiborne is expected to sharpen the process with its accessories know-how. Among Claiborne’s accessories brands are Kenneth Cole jewelry, Ellen Tracy handbags, Lucky handbags and Juicy Couture handbags, jewelry and cold-weather accessories.