Luxury Institute News

June 10, 2018

Kate Spade stepped away from her brand a decade ago. But what happens now?

The Washington Post
June 8, 2018
By: Abha Bhattarai

 


The Kate Spade brand is owned by Tapestry, which also includes Coach and Stuart Weitzman. (Michael Nagle/Bloomberg)

The Kate Spade brand could survive the death this week of its co-founder because Kate Spade the designer handed over the reins to her company years ago.

But Spade’s suicide could compound the difficulties facing her newer label, Frances Valentine.

Spade, who died Tuesday morning, co-founded her namesake company 25 years ago, bringing color and whimsy to a handbag market filled with dark leather goods. But she sold a majority stake to Neiman Marcus in 1999 and stepped away altogether in 2007. The brand has traded hands twice since and now belongs to Tapestry, the parent company of Coach, which bought it last year for $2.4 billion.

“Kate Spade the brand now transcends Kate Spade the person, which is how you know this is a truly successful brand,” said William McComb, the former chief executive of Liz Claiborne (later renamed Fifth & Pacific), which owned the Kate Spade line from 2006 to 2017. “Kate created something that was simple and stylish, modern and fun — and that’s what continues to this day.”

The brands that have endured the deaths of their namesake designers typically had already moved on years earlier. Hubert de Givenchy, whose little black dresses were closely associated with Audrey Hepburn, died this year, but in 1995 stepped down from his fashion house, which had recently been sold to French luxury giant LVMH. Yves Saint Laurent also handed over the reins of his label and sold it to another French luxury group, Kering.

When Alexander McQueen died in 2010 at age 40, his fashion house was quick to name a successor: Sarah Burton, who had worked with McQueen for many years. The Metropolitan Museum of Art unveiled an exhibit celebrating McQueen, and the brand’s loyal customers kept coming back.

“Let’s be honest: All founders die,” said Milton Pedraza, chief executive of the Luxury Institute, a market research firm in New York. “But if your brand has great DNA — Apple, Alexander McQueen — then there’s already a great foundation to build upon.”

But other brands whose founders died while they were still in charge haven’t fared so well. L’Wren Scott’s clothing line, for example, was dissolved 18 months after her 2014 death. Coco Chanel’s death in 1971 left her label in a 12-year slump until Karl Lagerfeld took over in 1983.

The stock price of Kate Spade’s parent company, Tapestry, faltered on Tuesday before recovering later in the week.

Spade’s laid-back sensibility and penchant for bright, bold colors have continued to drive much of the brand’s aesthetic over the years.

There was a possibility, some said, that the price of original Kate Spade products — her signature Sam bag, say — could climb on resale sites like eBay in the coming days, or that there could be a temporary spike in web traffic to the company’s site.

“Does this create a huge media buzz that drives more people to the Kate Spade website? Who knows,” said Brian Yarbrough, an analyst at investment firm Edward Jones. “But I don’t think this really changes anything for Tapestry. If a product looks good, people are going to buy it.”

Since taking over Kate Spade last year, Tapestry has tried to cut back on online flash sales and sweeping promotions that some say have tarnished the brand’s cachet. But it’s been off to a rocky start: Last month, Kate Spade posted a 9 percent drop in same-store sales, sending shares of Tapestry falling more than 12 percent.

“Although Kate has not been affiliated with the brand for more than a decade, she and her husband and creative partner, Andy, were the founders of our beloved brand,” Anna Bakst, chief executive of Kate Spade New York, said in a statement. “Kate will be dearly missed.”

Nicola Glass, who previously worked for Michael Kors, took over as creative director earlier this year. Her predecessor, Deborah Lloyd, had overseen design for more than 10 years, and helped turn the handbag line into a lifestyle brand that included ready-to-wear clothing, dinnerware and bedding.

But branding experts say Spade’s death raises a number of questions for Frances Valentine. The line of handbags and shoes she co-founded in 2016, which is carried by Nordstrom, Neiman Marcus and DSW, had yet to find the mainstream success of her namesake brand and it was unclear who would take over.

Source: https://www.washingtonpost.com/news/business/wp/2018/06/08/kate-spade-stepped-away-from-her-brand-a-decade-ago-but-what-happens-now/?noredirect=on&utm_term=.b729ce36fcd4

 

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