By Dana Mattioli, Ryan Dezember and Chelsey Dulaney
Coach Inc. has agreed to buy upscale shoe brand Stuart Weitzman
in a deal valued at up to $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.
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. Shares of Coach, down 34% in
the past year, edged up 12 cents in premarket trading.
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 expects the deal, which could close by May, to add
immediately to its earnings. For the year ended Sept. 30, Stuart
Weitzman posted $300 million in revenue. Coach reported $4.81
billion in revenue in its last fiscal year.
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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