Tapestry, which owns fashion and accessories brands Kate Spade New York and Coach, saw its shares tumble by more than 22% last Thursday, marking a 52-week low for the fashion conglomerate.
In an investor call last week, Tapestry chief executive officer Victor Luis said that the company is scaling back plans to open new Kate Spade stores and launch new products. He attributed the decline to a number of factors, including the cost related to bringing Kate Spade footwear in-house and the bump Kate Spade sales received after the brand’s founding designer’s death last year.
The Kate Spade brand, which Tapestry acquired in October 2017, is currently under the design direction of Nicola Glass, who has taken the brand’s jewelry, clothing, bags, and lifestyle products in a more sophisticated direction.
Kate Spade currently operates 407 stores globally, and together with its corporate offices employs 4,800 people. This past year, the brand expanded its footprint through store openings and the acquisition of operations in Malaysia and Australia.
The brand has also begun to gain traction in greater China, which it views as a “significant area of opportunity.” In 2018, 78% of Kate Spade’s sales were in the United States. And direct-to-consumer purchases made up 87% of total brand purchases (wholesale comprised 13% of total brand sales).
Fiscal 2020 priorities for the brand, according to an investor presentation published Aug. 15, include solidifying “brand authority,” “introducing exceptional and inspiring products,” enhancing the omnichannel platform globally,” and creating “immersive channel experiences.”
Tapestry acquired Kate Spade in 2017 to flesh out its portfolio of luxury-light brands. But so far it’s been an underperformer for the business and is past due for reinvention.
Surely, there are a number of economic forces playing into the brand’s recent declines—a softening apparel market in the U.S., for one. But one has to wonder if founder Kate Spade’s suicide hasn’t cast a pall over her namesake company’s fortunes. For many, it may be difficult to disengage the formidable designer—whose colorful, joy-filled aesthetics have been cast in a new light since her death—from the brand she built.
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