Kate Spade Wants to Sell $8,000 Furniture

Bloomberg Business

Posted: Mar 4 2015 By Kim Bhasin

Kate Spade has taken another step toward its goal of being the next Ralph Lauren by announcing new lines of furniture and home goods.

On Tuesday, the company announced it’s entering into four new licensing agreements to expand into furniture, bedding, bath, wallpaper, rugs, and other household items. 

"The breadth of our home décor line will feature products at all access points in both pricing and distribution from an $8 notebook to an $8,000 piece of furniture," Kate Spade Chief Executive Officer Craig Leavitt said on a conference call with analysts on Tuesday.  The company expects the new licensing categories will haul in another $100 million to $150 million in retail sales over the next year—not a particularly huge business for a brand that aims to reach $4 billion.

Furniture, in particular, is a leap fashion labels don’t often make. For instance, Kate Spade’s main rivals in the handbag wars—Coach, Michael Kors, and Tory Burch—don’t sell couches or side tables. That’s because fashion companies usually go for items that are more related to clothing. They start selling other stylish wearable items, like watches or jewelry, and perhaps branch out into fashionable home décor items, dinnerware, or fragrances.
But there are notable exceptions of companies that dove into pricey furniture, such as Anthropologie and Ralph Lauren—the latter a true lifestyle brand that sells everything from its signature polo shirts to fixtures for ceiling lights. Leavitt himself was previously a senior executive at Ralph Lauren.

Kate Spade’s move into furniture is going to be a work in progress that’s going to require some tweaking, says Simeon Siegel, an analyst at Nomura Securities. But it’s a promising marketing move, allowing Kate Spade to establish credibility as a source for more than just handbags. Lines such as furniture can be valuable marketing tools for a fashion label. “The more of these categories you have, the more you’re establishing yourself as a lifestyle brand,” he says.  

And Kate Spade has the benefit of having several triumphs in the past when entering new categories. For instance, through a partnership with home goods maker Lenox, its tabletop business is up 20 percent over last year. “Historically, all Kate Spade collaborations have been quite successful,” Eric Beder, an analyst at Wunderlich Securities, wrote in a note to clients. Kate Spade has in recent years also branched into beauty products, dinnerware, jewelry, stationery, and even Bluetooth speakers.

Fine furniture maker E.J. Victor will manufacture and distribute the furniture for Kate Spade. Rug maker Jaipur will handle the rugs, interior design firm Kravet will create the fabric and wallpaper, and home textile company DWI Holdings is the partner for bedding and bath.

The new products will begin hitting stores in May. They’ll be available at many different retailers, design showrooms, and Kate Spade’s own e-commerce site. 

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