What would Spade think of her legacy?
“Don’t over-brand.”
The advice from Andy Spade to an in-studio television audience not much more than a year ago was meant as a tip for entrepreneurs hoping to break through in retail. Over-branding telegraphs “phoney,” Spade went on to say, versus “authentic,” a corporate characteristic he and his wife, Kate, had in, well, spades.
Kate and Andy were sitting side by side that day, promoting their new shoe and handbag venture, Frances Valentine, with Kate awkwardly explaining that she had formally changed her name in order to avoid any confusion with her former eponymous company, Kate Spade. That she couldn’t remember the order of the names she had assumed, and had to correct a common misspelling and mispronunciation of one of them, was somewhat charming, and somewhat sobering. In television interviews across many years, Kate Spade would have to inform viewers that she and Kate Spade the company had long ceased their association. How odd that must have felt.
The designer’s death this week has brought forth heartfelt tributes to Kate’s design esthetic (those chic structured purses that would not have looked out of place on the arm of Grace Kelly) and the sense of whimsy that defined her personality and still defines the brand (flamingo appliqués or a purse shaped like a pineapple). The look was often retro, recalling 1950s-era straw purses shaped like downsized picnic baskets or featuring cat whiskers and pop-up ears. Kate’s signature style re-emerged at Frances Valentine, where she designed wee straw purses shaped like honeypots while her Milanbased shoe designer had fun with geodesic dome-shaped heels.
The branding story here, the corporate arc, is the surprising way in which the Kate Spade imprimatur survived a bumpy ownership ride.
It’s a test case for aspiring MBAs, or design students, or anyone who has set her sights on advertising.
There wasn’t even a plan to start a company. There was Kate’s plan to design a purse. That notion may never have been realized had Kate not cut short her career at a Condé Nast publication because, as the couple recounted, Kate was distressed about the treatment of one of the magazine navvies. She quit. So out of necessity was born inspiration. The stylish tote that emerged — black, waterproof, nylon — belied the belief that accessories had to be luxe in order to be “designer.” The brand, with the Kate Spade marque was grown organically from core beliefs and into bright spring colours, not from some marketing gambit, and found a niche among younger, fashionconscious, “aspirational” consumers. Accessible luxury became the watch phrase.
The young couple found themselves run off their feet by success (they had cashed their company pension plans for seed capital) and brought in two partners. In 1997, four years after its launch, Kate Spade revenues reached $11 million (U.S.). A year later, revenues hit $27 million. The purses were a hit for luxury goods retailers such as Neiman Marcus, and by 1999, three signature Kate Spade stores had opened. In February of that year, the Neiman Marcus Group bought control of the company — 56 per cent — for $33.6 million.
Six years doesn’t seem like a long time for the founders to be in control. And $33.6 million would soon look like chump change. But Neiman Marcus, the retailer renowned for its discerning curation of fashion brands, had seized upon a “brand development initiative ... a strategy designed to create shareholder value by investing in designer resources that serve affluent customers.” Kate Spade would continue to be the design mind behind Kate Spade, and Andy Spade would serve as CEO. In an interview with Fortune magazine, Kate professed happiness with the Neiman partnership. “We want to maintain creative control over everything that goes out under our name,” she said in an interview.
The marriage was relatively short lived, between the retailer and designer that is. In the spring of 2005, Neiman Marcus itself was bought out, and mere months later announced it was seeking “strategic alternatives” for the Kate Spade brand, a process that dragged and dragged, with the Spades insisting that the most important objective was to find the right partner to continue growing the company. The fashion industry press reported that a $100-million price tag had been placed on Kate Spade LLC, a price assessed as prohibitive and theorized that the company had spread itself too thin through too many line extensions (stationery, dinnerware). The Spades had a put clause in their contract with Neiman, and perhaps to advance some sort of clear future for the company, put their remaining 44-per-cent interest to the retailer, which paid $59 million to buy the Spades and their partners out. That transaction paved the way for Liz Claiborne Inc. to purchase 100 per cent of Kate Spade in late 2006, for $124 million. After a brief consulting period, the Spades, in 2007, were gone for good, with Kate Spade saying it was a good time to take a break and a good time to focus on family. She had given birth to a daughter, Frances Beatrix Spade, known as Bea.
In a way, the Spades were lucky to be out of it. Liz Claiborne was suffering its own identity crisis, soon deciding it wanted to sell so-called “partnered brands” — Ellen Tracy, Dana Buchman, Laundry by Design and many more — to focus on three “power” brands with global potential: Juicy Couture, Kate Spade and Lucky Brand. The Liz Claiborne name, once synonymous with the breakthrough designer who, much like Kate Spade, introduced fun fashion and colours in the 1970s, was reduced to a licensing arrangement with J.C. Penney. By early 2012, the Clairborne name had been corporately erased in favour of Fifth & Pacific Com- panies, which would narrow its focus further. “Our business strategy is centred on the Kate Spade family of brands,” the company said in late 2013. So it changed its name to ... Kate Spade.
It’s easy to see why. Kate Spade revenues grew to $312.9 million in 2011 to $743.2 million in 2013 to $1.24 billion in 2015. There were errors — Kate Spade Saturday — and the usual waxing and waning of consumer taste.
Kate Spade the person would say in interviews she adored those years spent at home with Bea. But she must have been champing at the bit to get back in the game. She launched Frances Valentine in an accessories landscape that had exploded in her absence and a social media environment that didn’t exist when she was the Kate Spade brain behind Kate Spade. It would be very hard to make the case now that Frances Valentine will survive.
And Kate Spade the company? Coach Inc., the near 80year-old American-maker of fine leather goods, bought Kate Spade 10 months ago for $2.4 billion. I wonder how that news felt when it landed on Kate Spade the person. Coach had previously purchased Stuart Weitzman — designer footwear — and after buying Kate Spade figured it needed a new name to convey the essence of this “global house of brands powered by optimism, innovation and inclusivity.” None of those attributes is conveyed in the company’s new name: Tapestry Inc. What must Kate Spade have thought?
This spring, Tapestry brought back Kate Spade’s first black nylon tote, a tribute to the bag’s 25th anniversary. The Kate Spade name, it seems assured, will live on.