Kate Spade LLC

International Directory of Company Histories, Volume 68 (1997) by Ed Dinger

Kate Spade stuck with the square shape, a consistency that helped the new label to differentiate itself until it caught on with the public. The company grew slowly but steadily, at a pace with which the couple felt comfortable. In 1993 they brought in a partner, Pamela Bell Simotas, who helped in locating materials and producing the bags, and a year later their old college friend, Elyce Arons, became a partner to head sales and public relations. Kate and Andy also became more than business partners, marrying in 1994. In 1993 the company generated less than $100,000. Two years later that number grew to $1.5 million. During shipping season, the couple's apartment was packed to the ceiling with inventory, but the company soon was able to move into a 2,800-square-foot space on 29th Street, which combined a showroom with manufacturing capabilities. Andy quit his job in 1996 to devote his energies full time to the company. After Neiman Marcus and Saks each ordered 3,000 bags that year, sales jumped to $6 million and Kate Spade was able to turn a profit for the first time. Also in 1996 Kate Spade opened its first boutique, a 400-square-foot shop located in Manhattan's trendy SoHo district, and moved its headquarters into a 10,000-square-foot space in West 25th Street. The spaces were designed by Rogers Marvel Architects, a firm that lacked retail experience. But like Kate Spade, it believed in simplicity and the use of unusual materials. The fact that Rogers Marvel lacked retail experience, in fact, was a plus as far as Kate and Andy Spade were concerned. It would be a collaboration that would continue with the opening of additional boutiques. Just a year after opening its first shop, Kate Spade outgrew the Thompson Street space and moved to a new Soho location, with a number of other shops in the planning stages in Los Angeles and elsewhere.

Kate Spade bags had become trendy enough that the company now had to begin worrying about copies and knockoffs. In 1997 the company sued Gap Inc.'s Banana Republic subsidiary for selling a copy of a Kate Spade nylon tote bag, forcing the retailer to drop the item. Other retailers also would be forced to stop infringing on Spade's designs, including Dayton Hudson and Kmart, as well as manufacturer Accessory Network. Kate Spade also began expanding beyond fabric totes, introducing a collection of leather handbags and other small leather goods in August 1997. The company looked overseas as well, signing a manufacturing, distribution, and licensing agreement with Itochu Fashion System and Sanei International, with the goal of creating 29 in-store shops in Japan and another ten freestanding shops. In addition, Kate Spade began advertising on a national level, as it began taking steps to elevate itself from mini-brand to major label status.

Changing Directions in the Late 1990s

Other companies recognized the potential of the Kate Spade brand, which embodied simplicity and elegance, and several attempted to buy all or part of the company. Neiman Marcus became a suitor and won over Kate and Andy Spade by assuring them creative control of the company they founded. In February 1999 Neiman Marcus paid $33.6 million to acquire a 56 percent interest in the company. The Spades and their two partners continued to own the rest of the company and handle day-to-day operations. Later in the year, Kate Spade found the right executive to bring professional managerial experience to the business. The company hired as its new president Robin Marino, a Donna Karan executive who had been the couple's first choice before hiring Ruzow. She had instead taken a position at Burberry Ltd., but now agreed to take on the challenge of growing Kate Spade, which generated some $25 million in sales in 1998 and $50 million in 1999. Andy Spade remained the company's chief executive officer, however.