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Kate Spade inks JV with Walton Brown for Greater China
02
Feb '15
US apparel marketer, Kate Spade & Company has signed a joint venture with Walton Brown to establish a strategic network of stores across China, Hong Kong, Macau and Taiwan.

The newly formed partnership will leverage the expertise of Walton Brown which is a subsidiary of the Lane Crawford Joyce Group, Asia's premier fashion retail and brand management group.

The partnership will align Kate Spade & Company's existing businesses in China and Hong Kong, Macau and Taiwan under one combined structure.

Following the formation of the partnership, both Kate Spade Hong Kong, Limited, and Walton Brown will own 50 per cent of the shares of Kate Spade China and KS HMT Co., Limited.

With an equal partnership structure which has an initial term of 10 years, Kate Spade & Company and Walton Brown will actively manage the business together.

Alongside, Kate Spade & Company also announced a share purchase agreement with E-Land Fashion China Holdings Limited, its current partner in China, to acquire E-Land's 60 per cent stake in KS China Co., Limited.

The combined transactions are expected to include a $36 million payment to E-Land to acquire its interest in Kate Spade China and terminate related contracts.

It will also include receipt of approximately $21 million from Walton Brown for their interest in the joint ventures subject to adjustments.

In addition, Kate Spade estimates, it will incur restructuring and transaction costs of approximately $5 million in order to convert the wholly owned businesses in Hong Kong, Macau and Taiwan into a JV.

“These transactions are consistent with our partnered and capital-efficient approach to geographic expansion and lay the foundation with a long-term potential of 100 stores,” Kate Spade said.

Kate Spade & Company will continue wholesale distribution to the JV in China and expects to begin wholesale distribution to Hong Kong, Macau, and Taiwan through the JV in the first quarter of 2015.

Accordingly, the Kate Spade will no longer consolidate the operations for the businesses in Hong Kong, Macau and Taiwan, which had net sales of approximately $34 million.

The apparel marketer added that its distribution agreements with Valiram in Singapore, Malaysia, Indonesia and Australia and AT Luxury in Thailand are not affected by these transactions. (AR)

Fibre2fashion News Desk - India

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