TheChek News Flow

Specialty retailer Coach (COH 36.73) splashed down in 2014 as its stock declined 33% on the back of some disappointing operating results. The company, however, is starting 2015 with a splash as it announced today that it will acquire designer footwear brand Stuart Weitzman from Sycamore Partners in a transaction valued at up to $574 million in cash.

The addition of Stuart Weitzman, which has operations in over 70 countries, is part of Coach's effort to revamp its brand and will serve as a complement to its premium handbags and accessories businesses.

In the twelve-month period ended September 30, 2014, Stuart Weitzman realized net revenues of approximately $300 million. Coach for its part reported FY14 revenues of $4.8 billion.

Following its fiscal first quarter report in October, Coach said its FY15 outlook calls for a low double-digit decline in sales, a mid-to-high 20s decline in North American same-store sales, gross margins of 69-70%, and an operating margin in the high teens.

The Stuart Weitzman acquisition, Coach said, is expected to be immediately accretive to earnings, excluding transaction costs. The deal is expected to close by May 2015.

Coach will make initial payments of approximately $530 million and contingent payments up to $44 million upon the successful achievement of selected revenue targets over the three years following the close of the transaction.

Coach ended its fiscal fist quarter (Sep) with just over $900 million in cash and short-term investments on its balance sheet. The company said it will finance the Stuart Weitzman purchase with cash on hand or other sources of financing in the credit and capital markets
.