US: Kate Spade completes Hong Kong South East Asia deal
Fifth & Pacific Companies subsidiary Kate Spade has completed the acquisition of its Hong Kong South East Asia business from long-term distribution partner Globalluxe.
The US$34m acquisition was announced last year and is part of the company's strategy to fully or partially own the majority of its Asia-based businesses.
In Hong Kong, Macau, and Taiwan, Kate Spade will directly own and operate the businesses previously operated by Globalluxe.
In Singapore, Malaysia, and Indonesia, Valiram - the firm's new partner in these countries - will operate the Kate Spade New York and Kate Spade Saturday businesses through distribution agreements. Valiram will also fund around $1.5m of the transaction value to acquire operating assets in certain regions.
In Thailand, Kate Spade has entered into a direct distribution agreement with AT Luxury, Globalluxe's current sub-distributor.
Kate Spade Completes Previously Announced Acquisition of Hong Kong and Southeast Asia Brand Operations from Globalluxe
NEW YORK, NY, February 11, 2014 -- Kate Spade, LLC & Kate Spade Hong Kong Ltd. (together, "Kate Spade"), both wholly-owned subsidiaries of Fifth & Pacific Companies, Inc. (NYSE: FNP), announced the acquisition of the KATE SPADE businesses in Hong Kong, Macau, Taiwan, Malaysia, Singapore, Indonesia and Thailand from their long term partner Globalluxe. The total transaction value was approximately $34 million, including $4 million for working capital and other previously agreed adjustments with the payment to Globalluxe due in the first quarter of 2014 . In Hong Kong, Macau, and Taiwan, KATE SPADE will directly own and operate the related businesses previously operated by Globalluxe. In Singapore, Malaysia, and Indonesia, KATE SPADE announced that Valiram, its new partner in these countries will operate the kate spade new york and KATE SPADE SATURDAY businesses through distribution agreements and will fund approximately $1.5 million of the transaction value to acquire operating assets in certain regions. In Thailand, Kate Spade has entered into a direct distribution agreement with AT Luxury, Globalluxe's current sub-distributor.
For fiscal year 2013, Globalluxe's retail net sales for the kate spade new york brand were approximately $44 million, an increase of 25% from the prior fiscal year on a local currency basis, with pro forma operating margins in the mid-teens. Globalluxe and its distribution partners operated six stores and one concession in Hong Kong, one concession in Taiwan, one store in Macau, two stores and one concession in Singapore, two stores in Malaysia, three stores and one concession in Indonesia, and two stores and six concessions in Thailand. Prior to the Southeast Asia buyout, Kate Spade maintained wholesale distribution to Globalluxe. Following the Southeast Asia buyout, Kate Spade will maintain wholesale distribution to Valiram and the distributor in Thailand and recognize direct-to-consumer sales in Hong Kong, Macau and Taiwan. We expect that the profit from the now fully owned retail operations that include direct-to-consumer distribution will be incremental to the wholesale profits generated in 2013. The expected incremental sales and profits resulting from these transactions are reflected in the sales and adjusted EBITDA guidance previously provided by Fifth & Pacific Companies, Inc.
Pursuant to this acquisition and the KATE SPADE joint venture in China, Kate Spade established an Asian regional headquarters in Hong Kong and has recruited local talent to manage the operations purchased from Globalluxe. The Hong Kong regional headquarters also helps manage other brand operations and partnerships in the region including the joint venture in China and the newly formed distribution arrangements for Singapore, Malaysia, Thailand and Indonesia.
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 nearly 300 KATE SPADE branded stores worldwide and a thriving e-commerce business.
About Valiram Group
The Valiram Group was established in Kuala Lumpur, Malaysia in 1935, originally specialising in the textile trade. Today, the Valiram Group is Southeast Asia's leading luxury goods and specialist retailer with presence in Malaysia, Singapore, Indonesia, Australia, China, Philippines, Thailand, Russia, Macau, and Hong Kong. The Group operates over 250 stores, representing in excess of 150 brands across various categories including fashion and accessories, timepieces and jewelry, leather goods, fragrance and cosmetics and confectionary. Creating world-class retail environments which offer compelling and luxurious shopping experiences is the hallmark of the Group as it continues to bring to the region iconic luxury brands as well as cutting-edge retail concepts in the domestic and travel-retail arena. The Group is headquartered in Kuala Lumpur, Malaysia.
About Fifth & Pacific Companies, Inc.
Fifth & Pacific Companies, Inc. owns the KATE SPADE family of brands including kate spade new york, KATE SPADE SATURDAY and JACK SPADE. In addition, the Adelington Design Group, a private brand jewelry design and development group, markets brands through department stores and serves jcpenney via exclusive supplier agreements for the LIZ CLAIBORNE and MONET jewelry lines. In November 2013, the Company completed the sale of the JUICY COUTURE intellectual property to Authentic Brands Group (ABG) and is working under a license from ABG as the Company transitions and winds down the JUICY COUTURE business through 2014. The Company also has a license for the LIZ CLAIBORNE NEW YORK brand, available at QVC, and LIZWEAR, which is distributed through the club store channel. Visit www.fifthandpacific.com for more information. Fifth & Pacific Companies, Inc. is scheduled to change its name to Kate Spade & Company following the release of fourth quarter earnings results on Tuesday, February 25, 2014, after which the Company will begin trading as NYSE:KATE.
Original source: Fifth & Pacific & Companies
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