Why Kate Spade Saturday Missed the Mark

Kate Spade New York’s promising sister brand is closing its stores. But why?
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Kate Spade New York’s promising sister brand is closing its stores. But why?
Kate Spade Saturday's Houston store. Photo: Kate Spade

Kate Spade Saturday's Houston store. Photo: Kate Spade

Last week, Kate Spade New York announced that it would close every one of its Kate Spade Saturday and Jack Spade stores -- 31 locations in sum. KSS will become a part of Kate Spade New York, and Jack Spade will soon be sold exclusively through wholesale and e-commerce channels.

Kate Spade & Company had a decent 2014, with net sales up 40 percent to more than $1.1 billion last year, and $150 million in earnings before interest, taxes, depreciation and amortization. (Usually shortened in financial filings to EBITDA.) That’s good. But something wasn’t working at the retail level for these two brands. "We continue to focus on two axes of growth – geographic expansion and product category expansion,” said CEO Craig Leavitt in a statement. “We are early in our journey as Kate Spade & Company, and we see a clear path to becoming a four billion dollar business at retail. By taking these actions, we will be able to accelerate the fulfillment of our lifestyle brand vision, expanding our product categories and reaching customers in all facets of their lives, better positioning us to deliver on Kate Spade New York's full potential."

For a short refresher: Kate Spade & Company was once called Fifth and Pacific, which was once called Liz Claiborne. Since acquiring Kate Spade New York in 2006, the company has sold off its other brands -- including Liz Claiborne, Lucky Brand denim and Juicy Couture -- until it was left with the strongest contender to become a $4 billion brand. Which means there is more riding on Kate Spade’s success than ever.

The new Jack Spade approach is pretty straightforward: The company says that the stores are no longer "relevant," so it’s focusing on e-commerce and selling to other stores. It’s a somewhat surprising turn given that direct retail is supposed to be so much more profitable than wholesale, but the brand -- which sort of launched the hip messenger bag movement -- has felt staid for several years. (While menswear is a growing market with a lot of potential, there is greater competition than there was when Jack Spade sold its first bag in 1997.) This will give the company a chance to reposition Jack Spade; and new stores could be opened if demand surges in the future.

Kate Spade Saturday, though, is a more a complex situation. Launched in 2013, the brand’s concept goes back to 2009, when -- according to sources familiar with the situation -- KSNY started batting around the idea of doing a collaboration with Target. Years later, when Kate Spade Saturday actually came to fruition, it was meant to launch in Japan only. American editors loved it, though, and web chatter turned into real customer demand. While the first few stores opened in Japan, the U.S. got access via e-commerce, followed by temporary pop-up shops, followed by permanent outposts everywhere from Houston to Honolulu -- which were still opening toward the end of last year. And earlier this year, it launched a home furnishings collaboration with West Elm.

The sentiment toward Kate Spade Saturday, especially in the beginning, was impressive. Even a trademark infringement lawsuit brought against the company by Saturdays Surf NYC -- in which a judge ruled in favor of KSS -- couldn’t keep it down. But apparently Kate Spade and Co. thinks it makes more sense standing with KSNY, not beside it. The stores will close over the first half of 2015, followed by the website. The brand will then be re-introduced as a part of Kate Spade New York. "We now have a better understanding of our customers' weekend style, thanks to the hard work and contributions from the members of our Kate Spade Saturday family who developed commercially appealing products and attracted new customers through the Kate Spade Saturday business,” Leavitt said.

Okay, but what really happened? Why spend all that money only to take it back in less than two years?

Kate Spade Saturday was originally billed as a C. Wonder competitor, so it’s hard not to compare the two businesses. In the end, KSS suffered from a lot of the same symptoms as C.Wonder -- which filed for bankruptcy last week -- although it had more going for it. The quality was questionable for the price point, but not terrible. The fit was a problem for many: too boxy. Yet others -- including me -- liked it. Maybe Kate Spade & Company was too aggressive with the roll out. While it’s a cool brand with great product, I could see certain silhouettes and motifs -- trapeze dresses and peplum pants; paint splatters and zig-zag stripes -- proving a little too avant-garde for a mass audience.

But I actually think Kate Spade Saturday’s biggest problem might’ve been that it launched with too many categories. Everybody wants to be a lifestyle brand these days, and both C.Wonder and KSS offered everything from jewelry to home goods from the get go. It’s the dream, right? To be like Ralph Lauren, winning in every channel. But when you wrap up a lifestyle brand like a present and hand it over to consumers, they’re not always comfortable accepting it. The young companies that seem to be doing really well right now are all about getting good at one thing. Everlane wants to make great basics, introducing a new product every few months. Mansur Gavriel only introduces one or two new bag silhouettes each season. Because they are considerate, we want more from them.

Kate Spade & Company has made it clear that KSS is not disappearing, although the company has yet to reveal how it will be presented under the Kate Spade New York brand. I look forward to seeing its next iteration. Let its mistakes be a lesson to other specialty retailers that are struggling right now. From the end of Piperlime and the changes at Gap to the closing of Jones New York, this week has elucidated one thing: that you cannot fool the consumer into loving something that isn’t meant -- or ready -- to be loved.