Two years after its $124 million acquisition by Liz Claiborne, the company is out to reclaim its role as a premier accessories brand.
At the helm of the new Kate Spade team are co-presidents Deborah Lloyd and Craig Leavitt, whose plans include updating handbag designs, expanding the firm’s retail and wholesale presence, and launching new product categories and in-store concepts. The brand is looking to double its current sales of $130 million over the next three years.
Despite Lloyd’s and Leavitt’s experience in growing fashion businesses — she helped grow the Burberry London collection under Rose Marie Bravo and inject more fashion into Banana Republic; he helped double Theory’s retail business — some remain skeptical as to whether Claiborne can grow a trend-focused brand like Spade given today’s troubled economy and crowded accessories playing field. Contemporary lines like Rebecca Minkoff and Botkier are appealing to fashion-driven consumers, while J.Crew and Tory Burch are fortifying their accessories focus with a solid infrastructure already intact.
It’s no secret the $4 billion Liz Claiborne has seen its share of trouble recently. The company’s stock fell 86.9 percent last year as it restructured and the banking crisis weighed on markets. Insiders contend Spade can flourish only if run as an independent entity, much the way Claiborne operates its superstar brand, Juicy Couture. Claiborne chief executive officer William L. McComb intends to do just that.
“As parent guardians of the business, we have an important stake in working with Deborah and Craig to shape financial targets and the strategy of the business, but they run the business,” McComb said. “They make all of the decisions of execution and operation, and work within the framework we establish. If you go to their office on 25th Street, it’s about Kate Spade. It’s not about Liz.”
Since Kate and Andy Spade launched the company 16 years ago, Kate Spade went from making coveted classic totes and accessories to a less-focused assortment crossing into ubiquity. Insiders attributed the firm’s falloff to its big business takeover — in 1999, Neiman Marcus Group purchased a majority stake in Kate Spade for $33.6 million. Six years later, equity firms Texas Pacific Group and Warburg Pincus purchased NMG for $5.1 billion.
While the Spades stayed on until 2007, the brand couldn’t maintain the momentum from its early years and was struggling, with revenues at the time of about $90 million.
Lloyd said her first priority was to build a strong team comprised of past employees and new staff that could reinvigorate the brand and help resurface the “wit and whimsy” it lost.
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