Once a solid bright spot in the fashion industry, the U.S. handbag sector is struggling to find its footing.
The latest evidence: Kate Spade reported a 2.4% comparable-store sales decline, its first such drop in at least 25 quarters. Excluding online sales, comparable sales would have slid 8.1%.
The decline was a sharp contrast to the performance of just a few years ago, when Kate Spade was posting annual comparable sales gains of more than 20% each from 2012 to 2014. Sales gains slowed to 12.6% in 2015 and then to 9.1% last year. (And if not for ecommerce sales, 2016 comparables would have shown an increase of just 1.1%.)
The result echoed a recent NPD Group finding that showed U.S. handbag sales fell $1 billion, or 12%, to $7.3 billion in the year ended February 2017, leading a 7% drop in industrywide fashion accessories sales.
With consumers often using accessories as a way to spice up their wardrobe, NPD cautioned that the decline signals a decline in fashion as a priority.
Kate Spade has hired advisers to explore strategic alternatives, and rivals Coach and Michael Kors are said to be possible bidders as a consolidation wave is expected to sweep the industry. Among the challenges facing the sector are declines in department store and mall traffic and changing consumer tastes, with spending shifting to experiences and services rather than material things. To that point, both Euromonitor and NPD Group data showed that luggage sales have outpaced those for handbags.