By Dana Mattioli, Ryan Dezember and Chelsey Dulaney
Coach Inc. has agreed to buy upscale shoe brand Stuart Weitzman
for $574 million, a rare acquisition for the purse retailer as it
seeks to expand its reach.
The Wall Street Journal first reported Coach was nearing the
deal late Monday.
Coach, which has historically focused on organic growth, will
pay private-equity firm Sycamore Partners $530 million in cash, in
addition to up to $44 million in contingent payments if it hits
certain revenue targets over the next three years. Coach expects
the deal will add immediately to its earnings.
Sycamore inherited Stuart Weitzman and several other brands when
it took Jones Group Inc. private last year. At the time, Sycamore
paid $1.2 billion for a collection of brands that included Jones
New York apparel, Easy Spirit, Nine West and Stuart Weitzman.
A number of interested parties bid on the shoe brand and
retailer, including other shoe makers and private-equity firms,
said people familiar with the sales process. Coach, which is best
known for its handbags, has been making an effort to bolster other
parts of its business, with a particular focus on footwear.
Sales of the New York-based Coach have been in a downward
spiral, along with its stock price. Coach's new chief executive,
Victor Luis, stepped into the helm last year replacing longtime CEO
Lew Frankfort. Since becoming CEO, Mr. Luis has tried to scale back
discounts on merchandise that have eaten into profits.
Coach said it expects the deal to close by May.
Write to Dana Mattioli at dana.mattioli@wsj.com, Ryan Dezember
at ryan.dezember@wsj.com and Chelsey Dulaney at
Chelsey.Dulaney@wsj.com
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