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Kate Spade at 20 the Brand Built from a Simple Nylon Bag Has Been flying Its Colors for Two Decades

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Kate Spade at 20 the Brand Built from a Simple Nylon Bag Has Been flying Its Colors for Two Decades WWDMilestonesSECTION II Kate Spade at 20 The brand built from a simple nylon bag has been flying its colors for two decades. ▲ AGGRESSIVE GROWTH PLANS ■ Design Extensions ▲ THE DIGITAL PLAY ■ Kate & Andy: What are they up to? Headband, holiday 2011; necklace, spring 2010; dress, holiday 2012; ring, fall 2011; Sam bag, 1993. Photo by Kyle Ericksen; Styled by Roxanne Robinson 2 WWD MONDAY, FEBRUARY 4, 2013 SECTION II WWD.COM WWD MILESTONES auguration ceremony last month. But despite the brand’s roaring A look from start, things weren’t always so bright. Kate Spade Founded in 1993 by Kate and Andy Saturday. Spade, along with partners Pamela Bell and Elyce Arons, the brand de- PHOTO BY JOHN AQUINO PHOTO BY veloped a cult following for its coveted ERICKSEN KYLE PHOTO BY boxy handbags and accessories. In 1999, it was sold to the Neiman Marcus Group, which was eventually taken over by private equity firms Texas Pacific Group and Warburg Pincus. Over time, the brand lost its mojo, didn’t develop new customers and its growth stalled. In November 2006, Liz Claiborne Inc. (now Fifth & Pacific Cos.) acquired the Kate Spade brand for $124 million and set out to re- claim its role as a premier accesso- ries resource. The Spades left in 2007. Claiborne installed Craig Leavitt and Deborah Lloyd as copresidents and began updating the handbag designs and expanding the firm’s retail and wholesale presence. Leavitt was pro- moted to ceo in 2010. When Leavitt joined, there was plenty of work to do. “When I got here, we like to say the brand was asleep,” said Leavitt, in an interview at his offices at 2 Park Avenue in New York. “It wasn’t to say the brand wasn’t strong. It had a great foundation and a great DNA. It had drifted off the radar a little bit and was a bit of niche brand, but with a really strong founda- tion. We wanted to figure out how we take that strong foundation and build that into something bigger, more relevant in the marketplace and more meaningful.” For the first six months, Leavitt believe we came out of the recession worked on developing a strategic plan faster and stronger than some of our and road map on how they were going competitive set.” to accomplish the turnaround. Further, he added, it didn’t make sense “Just when we were beginning the in the long term for the brand to take a execution of that, the world came off step backward just when it was beginning its wheels with the global recession,” to move forward. “We came out of the said Leavitt. other side pretty quickly and it’s been a They had some tough decisions to rocket ship since then,” he said. make. They had developed this stra- So how did they accomplish tegic plan and suddenly they were their goals? Craig Leavitt trapped in this financial situation. “We “It always starts with great product,” had to decide whether we stuck to that said Leavitt. During that time period, plan or dramatically modify it to meet they decided to launch jewelry and the needs of the crisis,” he said. ready-to-wear in-house. “We had deci- Because the company had just start- sions to make. Did we want to wait and ed to execute the strategy, the team felt catch a rising tide as the overall econo- Growth Spurt strongly that they needed to forge ahead. my improved? Or did we want to push Therefore, they didn’t do things that through with our strategic plan? We de- Ceo Craig Leavitt lays out his expansion plans as Kate some of their competitors did, such as cided to push through, and it turned out roll back retail prices or “skinny down to be the right decision not only for us Spade continues to blossom. By Lisa Lockwood the line.” “We felt we needed to excite as a brand, but from a product perspec- the consumer with compelling prod- tive. We brought color and optimism to uct and a consistent and cogent brand the market at the time. It turned out IT’S GOOD TO BE KATE. stores, expanding international sales, story,” he said. “We pushed through. We that was just what the consumer was As the crown jewel of Fifth & Pacific and broadening its product offerings probably bottomed out even further than looking for during those dark days.” Cos. Inc., the Kate Spade brand is per- to tap into a younger customer — and, some other companies did at the time. Consumer reception to the new colating on all fronts, from product of course, getting kudos for outfitting We didn’t have this knee-jerk reaction in lines was strong from the outset, said to geography, opening freestanding First Daughter Sasha Obama at the in- terms of promotional pricing. I strongly {Continued on page 4} January 1993: Kate Spade 1998: Kate Spade ▼ The company begins a major launches with a collection licenses Libretto LLC Neiman Marcus expansion in Asia. of nylon bags. for▼ stationery items. Donna Karan alum 1995: Sales crack $1.5 Stephen L. Ruzow joins the million in annual sales. ZACK SECKLER PHOTO BY company as chief executive officer with a goal of making 1996: Kate Spade opens it a worldwide brand. He de- Stephen its first shop in New parts after three months. YUKIE MIYAZAKI PHOTO BY Ruzow York’s SoHo, at 59 ■ It opens its first store Thompson Street. in Japan. ■ Sales hit $6 million. ■ Revenue is approximately $27 million. ■ Jack Spade launches. Estée Lauder Cos. Inc. to develop ■ The company wins a victory against 1999: In February, Neiman Marcus beauty and related products, which Gap’s Banana Republic unit, which pays $33.6 million to acquire a 56 hit stores in 2002. agreed to stop selling copies of the percent interest in the company. designer’s bags, settling out of court. Founding partners Kate and Andy 2000: Launch of footwear. Spade, Pamela Bell and Elyce Cox 1997: The company settles stay on to run the brand’s day-to- 2001: Eyewear makes its debut. similar infringement cases day operations. against Kmart, Dayton/Hudson ■ Jack Spade’s first store opens at 56 2002: As it approaches its 10th anni- and mass-market manufacturer Greene Street in SoHo. versary, revenues are approximately The Aoyama flagship in Tokyo. Accessory Network. ■ The company teams with the $70 million. {Continued on page 4} 4 WWD MONDAY, FEBRUARY 4, 2013 SECTION II WWD.COM WWD MILESTONES {Continued from page 2} Leavitt. “Those things were critical to us. They helped drive the clarity about what we were moving toward, which was a global lifestyle brand.” Cultivating both the direct-to-consum- er (via vertical retail and e-commerce) and wholesale aspect of the business has been a critical component of the Kate THOMAS IANNACCONE PHOTO BY Spade strategy. Today, 55 percent of Kate Spade’s business is direct-to-consumer, and 45 percent is wholesale. Among key wholesale accounts are Neiman Marcus, Nordstrom, Bloomingdale’s and Lord & Taylor. Leavitt said the current ratio is good, and he believes that, over time, di- rect-to-consumer penetration will grow, but not dramatically so. “We really be- A logo for the 20th anniversary. lieve in a multichannel approach to our business. We have a very strong whole- early 2014. Places like Australia, Brazil, sale business and great partners. We see Latin America and India are also being continued expansion in that channel as viewed as expansion opportunities. well,” said Leavitt. Leavitt said it has used the U.K. Pete Nordstrom, president of mer- over the past year-and-a-half as a chandising at Nordstrom, praised the learning tool before attempting a sig- Kate Spade operation. nificant entry into continental Europe. “Kate Spade is a great partner in all The company has a wholesale busi- classifications and channels — in stores, ness in Germany and is looking for online and in Nordstrom Rack,” he said. wholesale expansion in France this “We’ve been partners for over a decade, year, with more to come in Europe as and they are one of our most successful the brand moves forward. brands. Kate Spade is laser-focused on “One thing that’s important to us is the customer, bringing creative ideas that we position the brand very simi- and exciting product that resonate with larly in all regions around the world,” customers in a powerful way.” said Leavitt. He said the brand is not Kate Spade’s financial results tell a positioned higher or lower than it is in compelling story. the U.S. “We take a pretty consistent ap- In the fourth quarter ended Dec. 31, proach and that’s been really important. Kate Spade’s comp business increased It’s a very small world. The consumer’s 27 percent. The company has expe- traveling and seeing the product online.” rienced between 22 and 38 percent The Fifth Avenue store in Manhattan. Leavitt believes a consistent ap- quarterly comps all year. “It’s been proach to assortments, brand messag- very strong and we’re seeing contin- Georgia and Colorado, as well as a new this potential development, see story on ing and pricing strategies has been a ued strength. We were very happy with flagship on Madison Avenue, expected William McComb, page 12) big part of its success. holiday, pushing through Hurricane to open in late spring. In November, Kate Spade completed When Kate Spade decides to add Sandy’s impact in this region and wind- Looking at the whole picture, its deal to buy out its Japanese joint- more product categories, it frequently ing up with great results,” Leavitt said.
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