Tapestry, the parent company of Kate Spade, Coach and Stuart Weitzman, has acquired Kate Spade’s operations in Singapore, Malaysia and Australia. This followed the company’s seizing of its Mainland China, Hong Kong, Macau and Taiwan operations back in February this year, in a bid to assume greater direct control over its international distribution.
The move also comes on the back of net sales for Kate Spade totalling US$312 million. This was due to a “strategic pullback” in wholesale and online flash sales, the company explained in a recent financials report. In an analyst call, Kate Spade CEO Anna Bakst also explained that sales on e-commerce and in-store were also a reflection of the “strong and immediate heartfelt response” from loyal customers following the news of founder Kate Spade’s recent passing.
The sales result was also offset by the consolidation of its joint ventures for Mainland China, Hong Kong, Macau and Taiwan, according to Kate Spade’s fourth quarter results. Gross profit for Kate Spade had also totalled US$205 million on a reported basis, while gross margin for the period was 65.5%.
In a statement, Victor Luis, CEO of Tapestry, explained that the company will be leveraging on technology and digital to enhance and modernise the customer experience. This is notably through customisation.
“We will amplify our initiatives with marketing that balances unexpected brand placement and campaigns with broad appeal,” Luis said, adding that the company is excited about opportunities in women’s footwear, ready-to-wear and men’s across all categories. Luis said that the company will also continue to leverage on its multi-brand model, fuel innovation across brands and drive global growth with an emphasis on the Chinese consumer.
The company will also look to advance its digital and data analytics capabilities.
The report added that selling, general and administrative (SG&A) expenses for Kate Spade were at US$181 million, representing 57.9% of sales. Operating income for Kate Spade was US$24 million on a reported basis, representing an operating margin of 7.6%. On a full year basis, net sales for Kate Spade was at US$1.28 billion, while global comparable store sales declined 7%. This included a negative impact of nearly 500 basis points from a decline in global e-commerce.
Gross profit for Kate Spade totalled US$711 million on a reported basis, while gross margin for the period was 55.4%. Meanwhile, SG&A expenses for Kate Spade were US$773 million on a reported basis and represented 60.2% of sales. Operating income was a loss of US$62 million on a reported basis.
Last year, Tapestry (then-known as Coach Inc) acquired Kate Spade for US$2.4 billion. According to Luis at the time, Kate Spade had a “truly unique and differentiated brand positioning” with a broad lifestyle assortment and strong awareness among consumers, especially Millennials.
Months after the acquisition, Coach Inc changed its name to Tapestry to reflect its intention to grow beyond the Coach brand. The leadership team at Coach, Inc. had partnered with renowned brand agency, Carbone Smolan Agency, on all aspects of the rebrand.