American fashion brand Kate Spade plans to buy its Japanese joint venture partner, Sanei International, out of their 51 per cent share in Kate Spade Japan.
Craig Leavitt, CEO of Kate Spade said 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 realise 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’s strategy to fully or partially own the majority of its Asia based businesses. In May 2011, Kate Spade formed a joint venture in 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 also 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 the third quarter of 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 the joint venture was formed in 2009.
The company currently has 52 points of sale in Japan and expects to expand point of sale growth over the next several years. For the fiscal year to August 31, 2011, Kate Spade Japan’s net sales were approximately US$71 million.
The expected purchase price range for the buyout including debt repayment and related transaction fees is estimated to be between US$45 to US$50 million.
Kate Spade has 41 shops in the US, 94 shops internationally, new flagships in Brazil and London and distribution in more than 400 stores worldwide as well as an e-commerce business.
GB
