Coach purchased Kate Spade for $2.4 billion in a landmark deal that closed last Monday. The New York fashion handbag brands were competitors prior to the merge. Now Coach has a bigger hold of the market, targeting a growing number of millennial consumers.

Kate Spade, an established go-to brand in the mid-2000s and well-loved for its whimsical handbag designs, suffered a huge financial loss in recent years. The emergence of H&M, Forever 21, and Topshop, and other retail stores that are known for fast-fashion merchandise, had a huge impact on Kate Spade's sales.

A stronger partnership

With the brand now under Coach, it has potential to expand and grow in untapped international markets like China and Japan."The lessons we have learned during our own transformation provide a blueprint for guiding our strategy with Kate Spade," Coach CEO Victor Luis told investors when it confirmed the purchase, according to a press release.

Coach did its expansion outside U.S. over three years ago and earned much success. The management is confident it can do the same for the newly-acquired brand.

Following Coach's purchase, Goldman Sachs told clients that Coach's stock share has been upgraded.

"If successful, the proposed Kate merger agreement could be a transformational moment for the business," the company said in its message, according to CNBC. "The potential to create substantial earnings accretion through cost synergies and favorable financing costs."

Consumers not happy

While the business potentials are positive, Kate Spade consumers reacted negatively to the sale of the company.

Some worry Coach is going to change their favorite brand's whimsical handbag style or increase its prices. Many consumers have described Coach's penchant for basic brown handbags as "boring" and creatively "dumbed down." Some decry its potential loss of a boutique feel when the stores are redesigned.

Coach executives, however, said the brands will operate independently. Kate Spade will still have its own design team as well as sales and marketing teams.

Kate Spade first scouted for a buyer in December 2016. Back then, analysts also predicted Coach will be buying the brand.

The brand was founded by designer and businesswoman Kate Valentine with her husband in 1993. Neiman Marcus bought a stake in the company in 1999. Then in 2006, Liz Claiborne bought the brand for $124 million, which then saw its expansion into jewelry, homeware and children's clothes, apart from the handbags.

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