NEW YORK, June 7, 2012 /PRNewswire/ -- As part of a steady international push, Kate Spade New York (ksny) announces today that it intends to buy its Japanese joint venture partner, Sanei International, out of their 51 percent share in the jointly owned company, Kate Spade Japan. This is part of a robust international expansion, which includes recent store openings in the UK, Dubai, and Kuwait as well as further expansion into Brazil with additional store openings in Rio de Janeiro and Sao Paulo planned for this summer.
Craig Leavitt, CEO of Kate Spade New York says "Kate Spade New York has a long and successful history in the Asian market. We believe the brand has a unique ability to continue to grow internationally and be relevant to consumers around the world. In order to realize our international potential, we believe partially or wholly owned business models better enable us to connect more directly to our consumers, understanding and investing in their preferences and tastes more keenly. It is our strategy to build a global company to support what is already quickly becoming a global brand."
The move to acquire the Japanese business aligns with Kate Spade New York's strategy to fully or partially own the majority of its Asia based businesses. In May 2011, Kate Spade New York announced a joint venture in the People's Republic of China with the E.land group to create a significant brand presence with plans to grow to nearly 300 points of distribution by 2020. At that time, Kate Spade New York also announced its plans to buy back the Hong Kong South East Asia business from its long term distribution partner in January 2014.
The purchase of the Japanese business is expected to be completed in fall 2012. The Japanese business represents the company's second largest market outside of the US. The brand has been in Japan for the past 15 years and has experienced robust growth and increased brand awareness since operations in the joint venture in 2009. The brand currently operates 52 points of sale and expects to expand point of sale growth over the next several years. For the fiscal year ended August 31, 2011, Kate Spade Japan's net sales were approximately $71 million with operating margin in the high single digits and EBITDA margin (operating margin excluding depreciation and amortization) in the low double digits. Kate Spade Japan's direct to consumer business is greater than 90% of the total portfolio with strong year over year comp sales. Over the last twelve months ending April 2012, net sales have grown approximately 20%. The expected purchase price range for the buyout including debt repayment and related transaction fees is estimated to be between $45 to $50 million.
ABOUT KATE SPADE NEW YORK
In 1993, Kate Spade designed the utilitarian bag she'd been craving for years but couldn't find anywhere and so began a revolution in the accessories market. Simple silhouettes with clever details and crisp palettes soon established a visual shorthand for the brand that's recognizable the world over. In 2006, Kate Spade turned the reins over to design powerhouse Liz Claiborne Inc.- now Fifth & Pacific Companies Inc. (NYSE:FNP) and Deborah Lloyd, formerly of Banana Republic and Burberry, took the helm as creative director with an aim to broadening the line while honoring Kate's rich history. Today you'll find the brand on the arms of women everywhere – with 41 specialty shops in the United States, a thriving e-commerce business, 94 shops internationally, new flagships in Brazil and London and distribution in more than 400 doors worldwide.
SOURCE kate spade new york