Why Does Coach Not Want Consumers To Know The Acquisition Of Kate Spade?

Yesterday, the United States light luxury group

Announcement of acquisition

Later, the Group CEO Victor Luis said in an interview: "we do not want consumers to know that we have acquired Kate Spade".

According to the world clothing and shoe net, although the two companies are light luxury handbags and accessories.

But the Coach group (NYSE:COH) estimates that only 10% of the two brands overlap, while 60% of Kate Spade (NYSE:KATE) consumers are the Millennials.

The group said consumers will not see Kate Spade wallet in Coach stores. The Group intends to keep the two brands independent, and does not want consumers to know that Kate Spade and Stuart Weitzman are also under its banner.

Victor Luis stressed in an interview that Coach group does not want consumers to have any association between brands.

He doesn't think this is important for the takeover news. At present, Stuart Weitzman and Coach brands remain independent, and there is no crossover on the brand. All connections are in the back end business, such as logistics and supply chain costs.

Victor Luis revealed that the Coach group's current positioning for itself is the collection of modern luxury accessories and lifestyle brands in the US.

Kate Spade has a unique brand attitude and is young. It has high penetration, fashion, fun, femininity and a strange personality for the Millennials.

Coach is an American leather fashion house. It includes both the long history of the brand and the high quality product and fashion attitude brought by creative director Stuart Vevers.

Prior to joining Coach in 2013, Stuart Vevers was the creative director of Loewe, a luxury luxury brand in Spain, and also worked in luxury brands Bottega Veneta, Louis Vuitton and Mulberry.

It is noteworthy that the Coach group did not immediately close the Kate Spade stores and discount stores.

The group said that 35% of the two brands overlap.

However, consumers should be less likely to see Kate Spade products in discount websites such as Gilt and department stores that sell too much. Just like the way Coach is treated, Victor Luis is trying to reposition the price and channel of Kate Spade.

He plans to recall Kate Spade stock from discount websites and some wholesale channels, but that does not mean that prices will rise.

Earlier this month, Jimmy Choo, a JAB holding company, announced its bid for acquisitions.

There are rumors that Jimmy Choo is the next acquisition of Coach group, but Coach group has not responded to this.

In a telephone conference with analysts, Victor Luis pointed out that in the short term, the group might not have acquired such a scale acquisition of Kate Spade.

But it does not exclude small acquisitions such as Stuart Weitzman.

It is reported that Coach's purchase price for Stuart Weitzman in 2015 was US $574 million.

Although Victor Luis acknowledges that it will continue to acquire strategies to expand its brand matrix, he says there is no time to focus on competitors.

He believes that Coach group's current business is highly fragmented, and many businesses are new areas that have just entered. Attention should be paid to developing supply chains and global retail businesses.

Victor Luis believes that Asia is the most potential market for Kate Spade. Its consumer awareness in China is 1%, while Coach is 23%.

In the Japanese market, Kate Spade was 11% and Coach was 50%.

It is reported that the Coach group's $2 billion 400 million acquisition is expected to end in early July, which will increase the group's revenue in the 2018 fiscal year.

Coach group's sales decreased by 4% to US $995 million in the three months ended April 1, 2017, compared with 1 billion 30 million US dollars in the same period last year, operating profit increased 13% to 151 million US dollars, and net profit increased 8.9% to 122 million dollars compared with the same period last year.

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