Coach is Buying Kate Spade — Here’s What It Means For You

Coach Inc. Buying Kate Spade &
Mandatory Credit: Photo by Jason Szenes/Epa/REX/Shutterstock (7934273f) A General View of People Entering a Coach Brand Store on Fifth Avenue Store in New York Usa 19 November 2013 United States New York Usa Economy - Nov 2013

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* Coach Inc. buying Kate Spade & Co. for $2.4 billion
* Coach hoping to tap into Kate Spade’s millennial consumers
* Kate Spade gets access to Coach’s leather goods expertise

It’s official: popular accessories brand Coach is making a play for Kate Spade.

The handbag maker announced this week that it’s purchasing Kate Spade & Co for $2.4 billion, in an effort to boost sales among millennials.

The deal unites two brands to create a major lifestyle company that can now collectively target a wider audience. While Coach is a leader in the luxury handbag market, Kate Spade’s bags and accessories have fared better with younger shoppers (about 60 percent of Kate Spade’s customers are millennials, Coach says). That’s thanks to the brand’s lower price-point and more whimsical, trend-focused and colorful designs. Coach, on the other hand, retains a classic, more traditional aesthetic.

Coach says the merger won’t affect the Kate Spade name, however, promising to be “focused on preserving Kate Spade’s brand independence.” Still, customers will see some changes: Coach will cut back on Kate Spade’s availability at department stores, and move the brand away from online discount sites, like Hautelook and Nordstrom Rack. In order to improve the brand’s cachet, Coach will also limit the amount of times Kate Spade products go on sale.

Kate Spade, meantime, will now have access to Coach’s leather manufacturers and be able to tap into the brand’s larger distribution network. Coach is incredibly popular in Asia and Europe, and they’ll be looking to expand Kate Spade’s reach in those areas as well. Kate Spade currently only gets about 15 percent of its sales from outside North America.

This is the second major acquisition by Coach in two years. The company bought shoe brand, Stuart Weitzman, in 2015.