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TAPESTRY INC (TPR)
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Tapestry : Designer Found Dead in Apparent Suicide -- WSJ

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06/06/2018 | 08:48am CEST

By Suzanne Kapner and Zolan Kanno-Youngs

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 6, 2018).

The fashion designer Kate Spade -- whose sophisticated handbags with a touch of whimsy were a rite of passage for a generation of young, urban women -- was found dead from an apparent suicide at her Manhattan apartment Tuesday morning.

The 55-year-old sold a controlling stake in her namesake brand 19 years ago, cut ties with it in 2007 and took time off from the fashion business to focus on raising her daughter. She returned to the industry in 2016, designing shoes and handbags under the brand name Frances Valentine, which aimed to put an updated spin on her breakthrough style.

Officials said the designer appeared to have hanged herself with a scarf in her Park Avenue apartment at about 10:20 a.m. and was found by her housekeeper.

At a separate press briefing Tuesday, NYPD Chief of Detectives Dermot Shea said, "It appears at this point in time to be a tragic case of apparent suicide. It is early in the investigation. There was a suicide note left at the scene."

Ms. Spade was married to her business partner, Andy Spade, who is the brother of actor David Spade. The couple have a 13-year-old daughter, who wasn't home at the time of the incident, an official said.

A spokeswoman for the Kate Spade brand said, "Our thoughts are with Andy and the entire Spade family at this time."

Paula Fiedler, a neighbor in Ms. Spade's apartment building, said "everyone was crying" when they were informed of her death this morning.

Ms. Fiedler described Ms. Spade as a "determined person" whom she would frequently see at the building gym. "There is nothing I can say bad about her. She was warm, smiling, always willing to share. All of us are so sad."

The Kate Spade brand has changed hands several times since the founders sold a controlling stake to Neiman Marcus in 1999. The high-end retail chain agreed to sell the brand in 2006 to Liz Claiborne Inc., which later changed its corporate name to Kate Spade & Co. The company was acquired last year by rival Coach Inc., now known as Tapestry Inc.

Ms. Spade's new venture, Frances Valentine, hasn't fared as well, people familiar with the situation said. Some retailers that had initially carried the line such as Bloomingdale's have dropped it.

Memorials surfaced on social media as news of the designer's death spread, with people including designer Kenneth Cole and singer Josh Groban expressing their condolences.

"My grandmother gave me my first Kate Spade bag when I was in college. I still have it. Holding Kate's family, friends and loved ones in my heart, " Chelsea Clinton said in a tweet.

Others used the surprising news to raise awareness about suicide. "Kate Spade's tragic passing is a painful reminder that we never truly know another's pain or the burden they carry," Ivanka Trump said in a tweet.

The designer, born Katherine Noel Brosnahan in Kansas City, was one of six children. Her mother was a former airline attendant who later became a real-estate agent. The designer met her husband when she was a student at Arizona State University, where she graduated with a journalism degree. "Andy and I met in a little clothing store" where they worked, Ms. Spade said in a 2016 interview with The Wall Street Journal.

The designer said she showed an early flair for fashion. "I would have my mother take me to vintage stores and wear leopard swing coats and cigarette pants," she said in the interview. "In Kansas City I looked very odd." She said she designs the way she shops. "If I love it, I buy it."

The couple moved to New York, and Ms. Spade started at Mademoiselle magazine as an assistant, "tying models' shoes" and "getting hairstylists Snickers" as she worked her way up to fashion editor, she told NPR in a 2017 interview.

In the early 1990s, at a Mexican restaurant, Mr. Spade asked her, " 'What about handbags?' " she recalled. "And I said, 'Honey, you just don't start a handbag company.' And he said, 'Why not? How hard could it be?' "

Ms. Spade said she felt handbags at that time were too complicated, and there was a dearth of bags with clean, simple shapes. She began cutting patterns out of white paper and eventually found a pattern maker and potato-sack company willing to sell her fabric to turn her ideas into bags.

The couple debuted the bags in bright-colored utilitarian shapes at a New York City trade show and landed just two buyers, leaving Ms. Spade in tears and convinced she should quit. When she went home and told Mr. Spade who the buyers were -- the retailers Barneys New York and Fred Segal -- he said, " 'No, keep it going,' " she recalled.

The couple, along with two partners, started the business in 1993 and opened their first handbag shop three years later. They sold a 56% stake to Neiman Marcus in 1999 for $33.6 million.

"It became a cultural phenomenon," said William McComb, Liz Claiborne's former chief executive, who said the brand resonated far beyond its size. Kate Spade had less than $100 million in annual sales when Liz Claiborne bought it, he said. Mr. McComb oversaw the brand's expansion to include hundreds of retail stores and new product lines such as men's accessories, stationery and housewares. By the time Coach bought it last year, it had more than $1 billion in annual sales.

Ultimately, though, growth of the Kate Spade brand lagged behind that of Coach and Michael Kors Holdings Ltd., its rivals in "affordable luxury" accessories.

The Coach-Kate Spade merger was an effort by the two companies to adapt to slowing growth in handbags. Women have been trading down to smaller, less expensive purses, and discounting has pressured profits at both Kate Spade and Coach. Tapestry, which also includes the shoe brand Stuart Weitzman, has nearly $6 billion in annual sales and 1,300 retail stores.

The Kate Spade and Coach brands have been kept separate after the corporate combination. Tapestry has been scaling back distribution of Kate Spade merchandise to reduce discounting, much as it did with Coach. Kate Spade's global comparable store sales fell 9% for the most recent period, reflecting the pullback.

The Kate Spade store on Madison Avenue in New York was open for business Tuesday, with a handful of customers perusing racks of flowy summer dresses and strappy sandals. Today, Kate Spade has more than 140 U.S. retail stores and more than 175 abroad.

"She was someone I looked up to in life," said JoJo Deady, of New York City, a 26-year-old shopper at the store. "She was light, happy and fun. This shows you don't know what anyone is going through."

Rachel Beck, 53, was shopping in the neighborhood and decided to stop in and pay her condolences to the store's staff. She said she didn't know Ms. Spade was no longer involved in her eponymous brand.

Carrying a cream-colored Kate Spade cross-body purse, Ms. Beck decided to purchase another in a different color. "I thought it would be a nice thing to do today," she said.

--Sara Germano contributed to this article.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Zolan Kanno-Youngs at Zolan.Kanno-Youngs@wsj.com

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Financials ($)
Sales 2019 6 098 M
EBIT 2019 1 102 M
Net income 2019 821 M
Debt 2019 40,6 M
Yield 2019 2,55%
P/E ratio 2019 18,80
P/E ratio 2020 17,13
EV / Sales 2019 2,25x
EV / Sales 2020 2,06x
Capitalization 13 660 M
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Mean consensus OUTPERFORM
Number of Analysts 35
Average target price 55,6 $
Spread / Average Target 4,6%
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Victor Luís Chief Executive Officer & Director
Todd Kahn President, Secretary, CAO & General Counsel
Olajide James Zeitlin Chairman
Kevin G. Wills Chief Financial Officer
Michael Braine Chief Information Officer
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