Brand Crisis: When a Namesake Leaves a Company
Posted June 6, 2018 8:09 p.m. EDT
Soon after fans of Kate Spade learned that the designer had died in an apparent suicide Tuesday, stunned customers remembered the handbags they purchased after their first big promotion, or the linens they were given for their first home, or the onesies in which they dressed their babies.
Many wondered how the Kate Spade label would fare without Kate Spade.
Spade, though, hadn’t had a role there for more than a decade. By the time of her death, Kate Spade New York had passed from owner to owner, transforming from an accessible luxury to an oft-counterfeited commodity and an outlet mall mainstay.
But all the while, her identity — the smile, the beehive, the colorful dresses — remained a big part of the brand’s appeal to customers.
“She had such resonance that, even though she wasn’t overtly present, she gave customers an emotional connection to the business, sustained it through the memory of what she stood for,” said Wendy Liebmann, chief executive of the WSL Strategic Retail consultancy. “That’s what really carried their success, however diminished, over the past ten years. But the illusion is now no longer.”
That Spade was assumed to be part of a company that she stopped working for in 2007 is the kind of thing that happens frequently in an industry crowded with companies named after their founders. Calvin Klein agreed to sell his business in 2002. Oscar de la Renta’s fashion house struggled with leadership after the designer’s death in 2014. Jil Sander stepped away from her brand three times in 13 years, finally departing for good in 2013.
To varying degrees, those businesses and others still trade on the residual power of their founders’ personality and vision. Even as the allure of the Kate Spade label faded somewhat, analysts said that shoppers never stopped associating the company with Spade, and Spade with good style.
The departure, or death, of such a person isn’t always disaster for a brand. Some designers, like Diane von Furstenberg, have attempted to address the need for a succession plan for their eponymous lines. Other fashion houses, like Versace and Alexander McQueen, have landed in strong hands and continued to thrive even after the sudden loss of a founder.
But it doesn’t always work that way. Roy Halston Frowick, a fixture of the 1970s fashion scene, watched his Halston brand begin to cycle through a gauntlet of corporate maneuvers to near obscurity before his death in 1990.
“Any time there is a transition, whether planned or unplanned, it’s an invitation for customers and investors to consider whether the brand is still the real thing, whether it’s still got it,” said Susan Scafidi, founder of the Fashion Law Institute at Fordham Law School. “Having the name on the label makes it that much more of an open question and that much more of a risk.”
Spade seemed intensely aware of her name’s influence. She started Frances Valentine, a new label, in 2016 and changed her name to include “Valentine.” On Tuesday, her sister told The Kansas City Star that Spade had not sought mental health treatment in part out of fear that her troubles would reflect poorly on her brand.
“In this day and age, with so much media, people are brands, not just the products that people put on their body,” said Bobbi Brown, a friend of Spade who left her eponymous cosmetics label in 2016, more than two decades after she sold it to the beauty giant Estée Lauder.
Brown said she is regularly stopped by Bobbi Brown Cosmetics shoppers asking her to change or add products over which she no longer has any say. Founders also bring an emotional investment and creative élan to self-named companies that many corporate acquirers struggle to recreate, Brown said.
“A founder cares about details, about people, things that maybe big corporations don’t care as much about,” she said.
Spade and her then-boyfriend Andy Spade started the Kate Spade brand in 1993. Their handbags became a ubiquitous symbol of happy-go-lucky chic, and the company swelled into other product categories.
The couple first sold a majority share to Neiman Marcus in 1999 and offloaded the rest and walked away by 2007 to focus on family obligations.
Neiman quickly passed the enterprise off to Liz Claiborne, which later adopted the Kate Spade name for its entire organization. Last year, the group was purchased by Coach, which has since rechristened itself Tapestry. Though it has grown substantially since the Spades controlled it, business has been flagging lately. Sales at Kate Spade stores open for more than a year have fallen each quarter since Tapestry’s acquisition. Tapestry did not respond to a request for comment.
Designing duties were handed over earlier this year to Nicola Glass, formerly of Michael Kors, after having been held for a decade by Deborah Lloyd. Analysts at PiperJaffray wrote recently that Tapestry should try to perk up sales by targeting consumers in China, where brand awareness for Kate Spade is many times lower than for Coach, and also by scaling back the label’s presence on the shelves of discount-prone department stores and flash-sale sites.
The personal connection consumers can feel with a familiar name can help elevate a retail brand, but it can also cause complications.
Scafidi of the Fashion Law Institute said she now cautions emerging designers not to name their companies after themselves.
“The locus of the brand’s equity is the company’s name,” she said. “When the namesake leaves the company, she also leaves behind her name, and from a personal perspective, that is at best confusing and at worst quite painful.”