Reed Krakoff left his position as Coach's creative director earlier this year, and soon all of his ties to the global accessories brand will be severed.
Coach has entered into a binding agreement to sell Reed Krakoff to "a group led by Krakoff," WWD reports. Krakoff will then leave Coach officially.
Meaning Coach's threats must have worked. Earlier this month, Bloomberg reported that Coach had issued a filing with the Security and Exchange Commission saying that unless a binding agreement for the sale of the Reed Krakoff label was reached by July 29 (yesterday), Coach would reduce the designer’s bonus by $3 million.
We guess $3 million is an amount someone might miss--even if they would still make an estimated $5 million, as Krakoff would.
Of course losing out on money wasn't necessarily Krakoff's only reason for buying back the brand. Running a brand whose owner actively wants to unload it can't be a super positive experience.
It's yet another change being made as the company's president and chief commercial officer Victor Luis transitions into the role of CEO (current CEO Lew Frankfort is set to retire). Coach also announced that Mike Tucci, president of its North American group, and Jerry Stritzke, president and chief operating officer, would leave at the end of August.
Additionally, WWD reports that, despite still being profitable, Coach is disappointed with the performance of its accessories and handbags in the North American market. Net profits for the full year decreased 0.4 percent to $1.03 billion and shares of the company dropped 9.1 percent to $52.58 in the opening minutes of trading on Wall Street today.
We suppose unloading Krakoff will allow Coach to focus on that part of its business, which new creative director Stuart Vevers will now be tasked with improving.