It seems that the recent rumors surrounding Stuart Weitzman are true. In a recent move to help a struggling band, Coach is set to purchase Stuart Weitzman in an effort to diversify itself. Hopefully, the combination of these two American luxury fashion brands will be a beneficial move, as Coach has been struggling financially for some time now.
Coach, which operates out of New York City, is the largest luxury-handbag manufacturer in the United States. The company was top-dog for some time, however as competitors like Michael Kors and Kate Spade take market share away from Coach, the company needed to do something.
Coach has been hurting a lot recently. The companies sales in North America have gone down 19% in the first fiscal quarter of 2015 so far, and over the course of 2014 their stocks dipped around 30% making investors extremely displeased. Stuart Weitzman is a prominent American shoe company that is well respected in the industry, and after Coach acquires them as soon as possible, they hope this will help their company from loosing more money.
This acquisition should hopefully be beneficial to Coach, as Stuart Weitzman is a very successful company. Their shoes are extremely high end, and have been worn by celebrities such as Emma Watson, Kate Middleton, and Jennifer Lawrence. However it is not just the name that Coach hopes to benefit from. Additionally Stuart Weitzman sells their shoes in 70 different countries, and has many boutiques all over. Coach is hoping that this will give them access to new markets, in an effort to beat out the competition. Stuart Weitzman has also seen a solid growth rate of 10% over the last five years.
Coach will pay Sycamore Partners, a private equity firm whose portfolio consists of Stuart Weitzman, $530 million dollars in cash payments. When a target revenue and return on investments are seen within the next three years, Coach will pay Sycamore an additional $44 million dollars. Hopefully this move will be beneficial to Coach, but only time will tell how beneficial this acquisition will be.
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