Kate Spade wants to be Ralph Lauren.
Looking to quadruple retail sales to $4 billion, the handbag maker is modeling itself on Lauren’s empire: a global lifestyle brand selling everything from apparel to home goods.
Chief Executive Officer Craig Leavitt is starting by focusing on categories with ready appeal — fragrances, jewelry, watches, sunglasses — and offering a range of price points to attract millennials at one end and luxury shoppers at the other.
“Ralph Lauren is our business analog,” said Leavitt, 53, a former Lauren lieutenant who joined Kate Spade in 2008 and became CEO of the parent company last month. “We’re very confident in what we have set out to accomplish.”
It’s an audacious goal for a brand that has one-eighth the revenue of Ralph Lauren
, generates 75 percent of its sales in the US and is known mostly for quirky handbags beloved by gadabout urban women.
Having parted ways with its namesake founder, the retailer also lacks a public face.
Even with all the challenges, investors are bullish.
In the past 12 months, shares have climbed 92 percent, outpacing rival and Wall Street darling Michael Kors.
Eric Beder, an analyst at Brean Capital in New York, has questioned the shares’ valuation and in January downgraded them to “neutral,” the equivalent of a hold. On Feb. 26, he wrote that investors may be “highly disappointed.”
Founded in 1993 by Mademoiselle editor Kate Spade and her husband, Andy, the handbag maker won a small following. The brand lost luster after Neiman Marcus bought majority control in 1999.
Liz Claiborne acquired the company for $124 million in 2006, and the Spades left.
At the time, Liz Claiborne owned 30 apparel labels, including Juicy Couture and Lucky Brands. Over the years, most have been jettisoned or closed.
Three years ago, Liz Claiborne was sold to JCPenney and subsequently renamed itself Fifth & Pacific. In 2013, as it sought to focus on Kate Spade, Fifth & Pacific sold Juicy’s intellectual property to Authentic Brands and agreed to sell Lucky to Leonard Green & Partners.
Only the Kate Spade and the Adelington Design Group jewelry brands remain, and last month the holding company became Kate Spade & Co.
Creative Director Deborah Lloyd, recruited in 2006 after rejuvenating Burberry Group’s namesake brand, has updated the handbags and broadened out into other categories, including jewelry and apparel.
Last year, the company unveiled Kate Spade Saturday, a sub-brand pitched at younger women, with merchandise priced at about half that of the regular Kate Spade.
Two fragrances, Twirl and Live Colorfully, debuted in 2010 and 2013, respectively.
Swimwear and table linens will come later this year. The brand also is licensed for shoes, sunglasses, legwear, electronics cases, bedding and stationery.
In an interview last month at his Africa-themed lower Park Avenue office, Leavitt laid out his vision for the company.
In the coming years, he plans to expand international sales to two-thirds of the total from less than 25 percent now, and sees much of the opportunity in Asia. To boost growth at home, he plans to open stores and drive more sales online, where the brand now generates 20 percent of revenue. Retail sales will reach $2 billion by the end of 2016, he said.
Sporting a flower in his lapel and wearing patent-leather sneakers, Leavitt dismissed doubters.
“The DNA resonates with customers around the world,” he said. “It’s about encouraging the customer to lead a more interesting life. Everyone strives to spend more time in museums and have adventures like seeing a new part of the world or going to a flea market and finding something unique for your home. The brand is optimistic, happy.”
Leavitt’s ambitions are “aggressive” and will be hard to achieve against Ralph Lauren, Michael Kors, Coach and Tory Burch, said Marie Driscoll, founder of Driscoll Advisors. Building a strong lifestyle brand is key to standing out and succeeding in the oversaturated retail landscape.