Coach, the New York-based luxury fashion company that experienced declining sales in fiscal year 2014, announced on Tuesday that it plans to purchase footwear brand Stuart Weitzman.
Private equity firm Sycamore Partners, the company's current proprietor, is expected to receive a sum of $574 million, the Washington Post reports.
About $44 million of that figure is devoted to contingent payments, which is promised by Coach as long as revenue targets are met up to three years after the deal closes.
"Under normal circumstances, a leading American handbag brand acquiring a leading American footwear brand would be a reasonable strategy, but [Coach] may have too many balls in the air right now," Sterne Agee analyst Ike Boruchow said in a research note, according to the newspaper.
In recent months, Coach has attempted to combat declining sales with rebranding initiatives and new marketing campaigns. Competitors such as Kate Spade and Michael Kors, however, have been able to outnumber Coach's sales significantly.
Following news of the purchase, the luxury fashion company's stock fell more than one percent, which has been attributed to a lack of investor confidence in Stuart Weitzman's future.
There are currently about 70 countries that provide Stuart Weitzman products, the Associated Press reports, adding that the popular shoe brand had about $300 million in revenue for the 12 months ended Sept. 30, 2014.
"We are excited to be working with the Coach team and leveraging its strong infrastructure to help us drive efficiency and expand our product mix to an even broader consumer base worldwide," Stuart Weitzman said in a statement, according to the site.
