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Can Coach Create an American Fashion Empire?

Last updated: 06-09-2019

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Can Coach Create an American Fashion Empire?

In 2000, a company called Pegasus Apparel Group was founded with private equity money and a big idea: Buy a group of fashion brands based in the United States and create a homegrown version of the major European luxury conglomerates. It snapped up Miguel Adrover, a darling of New York Fashion Week, plus Daryl K, Pamela Dennis, Judith Leiber and Angela Amiri. But one year later, it had sold most of them and renamed itself the Leiber Group. So much for that. In 2012, Liz Claiborne Inc., the holding company for Juicy Couture, Lucky Brand jeans and Kate Spade, renamed itself Fifth & Pacific to telegraph its transformation into a lifestyle brand group that would leverage its coastal American identity into global markets à la big European luxury groups. By the end of 2013 it had sold both Juicy and Lucky. And in 2014 it renamed itself again: Kate Spade & Co. So much for that. Every few years, it seems, another American company decides to try to mimic the success of the major European conglomerates, LVMH Moët Hennessy Louis Vuitton (owner of more than 50 brands, including Givenchy, Fendi and Marc Jacobs, and of one of the largest market capitalizations in France), Kering (Gucci, Bottega Veneta, Saint Laurent, Stella McCartney) and Richemont (Cartier, Van Cleef & Arpels, Chloé). And then it doesn’t work. But because, it seems, hope springs eternal, this week another business put its hat in the ring: Coach, snapping up the aforementioned Kate Spade for $2.4 billion and creating its own stable of American brands, including Stuart Weitzman, purchased in 2015. The question now is whether Victor Luis, chief executive of Coach, can go where no other C.E.O. has gone before and create the first identifiable, successful American fashion group. To be fair, there are groups in the United States that have worked on the mass level — but they tend to focus on apparel, as opposed to fashion. That may sound like semantics, but it’s not. It’s the difference between supply chain rationalization (not that there’s anything wrong with that) and something more ambitious that has to do with national identity and representation on the global stage. The Authentic Brands Group owns Tretorn, Juicy, Hart Shaffner Marx, Hickey Freeman and Jones New York, among others. Assembled Brands, a new group started by Adam Pritzker in 2013, aims to start or to incubate a host of new collections, including Protagonist, Khaite and Tenfold, but it is tiny. PVH Corp owns both Calvin Klein and Tommy Hilfiger, as well as a host of more mass names such as Speedo and Izod, though it does not present them as integrated lines. But when it comes to the names that define American style, individuality has been the rule. Coach is clearly planning a group of a different kind: one that looks more like the European model, in terms of shared aesthetic identity — call it democratic fashion with a hopeful instead of heritage edge — as well as in its coherent focus on accessories. The idea seems to be that multiple brands can add up to more than the sum of their parts when it comes to real estate, marketing and manufacturing leverage. Not to mention image. I have spoken with several financiers and industry watchers over the years trying to understand why groups based in the United States have not been able to create such groups before, and there are two common theories: First, there is not a deep pool of established brands in America with roots in the national narrative and culture — the emphasis has been on entrepreneurship rather than preservation — and so groups have been forced to grow the footprints and name recognition of too many labels at once, a prohibitively costly task. Second, the European groups, though public entities, are still family-controlled (LVMH by the Arnaults, Kering by the Pinaults, Richemont by the Ruperts), and hence benefit from a long-term commitment and an almost paternalistic attitude. Whether Coach can work around these issues may well determine whether it can create a new model for the industry. While the future is unclear, one thing is certain: Everyone will be watching. Especially because Mr. Luis has indicated that when it comes to building his group, he is not done yet.

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