Coach has signed an agreement with private equity firm Sycamore Partners to acquire luxury designer footwear brand Stuart Weitzman. The transaction is reported to be worth up to $574 million.
As part of the deal, Coach will pay Sycamore Partners approximately $530 million in cash. In addition, the accessories brand and retailer will pay an extra $44 million if specific revenue targets are hit within three years of the transaction’s closing in May 2015.
Primarily known for its handbags, Coach will use the Stuart Weitzman purchase to expand further into footwear. With products currently sold in fine specialty and department stores worldwide, as well as its own branded stores, Stuart Weitzman has experienced significant growth over the past five years, with sales increasing at a 10% compounded annual rate. The brand saw net revenue of approximately $300 million over the 12 months ending on Sept. 30, 2014.
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“Over the medium term, we look forward to advancing the Stuart Weitzman brand’s global development, especially by leveraging Coach’s international infrastructure and expertise in handbags and accessories,” said Victor Luis, CEO of Coach. “In addition, we look forward to benefiting from the Stuart Weitzman team’s expertise in footwear development where they’re proven leaders in fashion and fit. Our strong balance sheet provides the flexibility to take advantage of this opportunity while re-investing in our core business and continuing to maintain our dividend at current levels.”
Stuart Weitzman will continue to serve as Creative Director and Executive Chairman of Stuart Weitzman Holdings LLC and Wayne Kulkin will remain CEO of the brand, according to a company statement.
“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,” Weitzman said in a statement. “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.”
In the past, numerous parties — including private equity firms Bain Capital and Permira —placed bids on Stuart Weitzman, according to The Wall Street Journal. Sycamore initially inherited Stuart Weitzman when it took over Jones Group, Inc. last year. The private equity firm paid $1.2 billion for Stuart Weitzman and several other brands, including Jones New York apparel, Easy Spirit and Nine West.
Perella Weinberg Partners advised Coach throughout the transaction, while Sycamore Partners was advised by Goldman Sachs Group and Citigroup.
