The constant discounting had diluted the brand’s luxury appeal,
and the company, under the direction of Mr. Luis, looked for ways to cut back on the discounts — including closing a significant number of its locations within department stores, known as “shop-in-shops.”
“If you want to be a premium brand, you can’t really be too strongly associated
with some of the mainstream department stores like Macy’s,” Mr. Saunders said.
Coach’s $2.4 Billion Kate Spade Deal Aims at Weak Middle of Fashion Market -
By ELIZABETH PATON, VANESSA FRIEDMAN and RACHEL ABRAMSMAY 8, 2017
Coach and Kate Spade have long been the affordable luxury brands of choice for the aspirational shopper.
While outlet stores have become more popular in recent years — Coach operates several hundred — department stores cannot attract the crowds they once did,
and traffic to malls has slowed as people hunt for bargains online.
This month, the company, which pioneered the sale of luxury handbags at relatively affordable prices, announced
that department store revenue had fallen 40 percent in the most recent quarter, a sign of how heavy discounts, falling foot traffic and other troubles have seeped into the brand.
But in recent years, those customers have gravitated to brands at more extreme ends of the style spectrum, toggling
between e-commerce giants like Amazon, fast-fashion brands like H&M and Zara, and luxury houses like Gucci.
Its acquisition of Kate Spade, announced on Monday, confirms months of speculation on Wall Street,
and is the latest in a series of purchases by the company, which aims to build a luxury group in the vein of European groups like LVMH Moët Hennessy Louis Vuitton and Kering, with two major differences: an identifiably American aesthetic and price.
