Coach has reached an agreement to buy handbag maker Kate Spade for $2.4 billion amid industry-wide struggles to get customers to pay full price for luxury items, Bloomberg reports. The companies have reportedly been in talks about the acquisition for months.
The retail industry "isn't as robust as we thought it would be at the beginning," Bloomberg Intelligence analyst Chen Grazutis noted following the sale. "It doesn't bode well for other brands' valuation."
Recently "sales at Coach have started to grow again as it pulled back from department stores and reduced promotions," The Wall Street Journal writes. "The company said it plans to do the same for Kate Spade after the deal closes, which is expected to occur in the third quarter."