By Kenneth Richard | The Impressionist
On the heels of revitalizing it’s own brand, Coach Inc. announced today it has signed a definitive agreement with Sycamore Partners to acquire the designer footwear brand Stuart Weitzman in a deal valued at $574 million. That’s a lot of boots.
The deal brings together two established players in the leather good space. Stuart Weitzman will be able to leverage Coach’s international infrastructure and expertise in handbags and accessories while Coach will benefit from Stuart Weitzman’s leadership in footwear. The deal also helps Coach impact it’s 2015 top line revenue which always appeases the wall street crowd as long as the cost associated with the transaction don’t offset profits.
Stuart Weitzman is a leading American luxury designer footwear brand with a solid growth trajectory and further significant domestic and international development potential. Importantly, the size, scope and vibrancy of the Stuart Weitzman brand, along with the continuity of its management team, allows for a seamless transition to Coach ownership, as we continue to focus on Coach’s brand transformation.
Stuart Weitzman picked the right time to sell as the brand experienced sales growth at a 10% compounded annual rate for the last five years with net revenues of approximately $300 million for the twelve months ended September 30, 2014. Mario Testino has photographed the last number of years of campaigns which included iconic models from Gisele to Kate Moss to Natalia Vodianova. Stuart Weitzman will continue as Creative Director and Executive Chairman of Stuart Weitzman Holdings LLC, and together with Wayne Kulkin, Chief Executive Officer of Stuart Weitzman, and their management team, will continue managing the business.
In Coach, we have found a strategic partner that respects our culture, and offers the scale, resources, and global business acumen to enable us to realize our full potential. We are excited to be working with the Coach team and leveraging its strong infrastructure to help us drive efficiency and expand our product mix to an even broader consumer base worldwide. We also look forward to supporting the Coach team with our technical and merchandising expertise in footwear.
Under the terms of the agreement, Coach will make initial cash payments of approximately $530 million to Sycamore Partners. Sycamore Partners is a private equity firm whose investment portfolio currently includes Aéropostale, Coldwater Creek, Hot Topic, Jones New York, the Kasper Group, Kurt Geiger, MGF Sourcing, Nine West Holdings, Pathlight Capital, Stuart Weitzman and Talbots. In addition, Coach will make up to $44 million in contingent payments to Sycamore Partners upon the successful achievement of selected revenue targets over the three years following the closing of the acquisition which is anticipated by May 2015.