Deals and IPOs

Coach to buy luxury shoe maker Stuart Weitzman

Scott Eells | Bloomberg | Getty Images

Accessories retailer Coach said it would buy luxury footwear company Stuart Weitzman Holdings from private equity firm Sycamore Partners in a deal valued at up to $574 million.

Coach said it would make initial cash payment of about $530 million to Sycamore Partners.

Coach will also pay up to $44 million in contingent payments to Sycamore Partners on achievement of certain revenue targets over the three years after the acquisition closes.

New York-based Coach, known for its Poppy handbags, has struggled to keep up with its fast-growing affordable luxury competitors, particularly Kate Spade & Co. and Michael Kors Holdings, whose handbags are rapidly gaining popularity in North America.

State of luxury retail
State of luxury retail

Buyout firm Sycamore Partners acquired Stuart Weitzman last year as part of its $2.2 billion purchase of Jones Group, the fashion company that owns retail chains Nine West and Jones New York.

Stuart Weitzman operates 45 retail stores across the United States and also has 62 elsewhere.

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The Wall Street Journal reported on the deal on Monday.

Early in December, Reuters reported that footwear retailer Brown Shoe Co. was trying to acquire Stuart Weitzman.

Brown Shoe was competing against other potential suitors, that include private equity firms and financial investors, the sources had said.

Coach shares jumped in December, with traders citing a retail industry news website report that French luxury products company LVMH Moet Hennessy Louis Vuitton was interested in buying the handbag maker.

Coach shares closed down 1.6 percent at $36.73 on Monday. (Get the latest quote here.)