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Rev. May 23, 2001

If I listened to all the seasoned opinions that I have heard over the years, we wouldn’t be where we are today. —Katy Brosnahan, founder of kate spade

It was March 1998, and Katy Brosnahan dashed into the meticulously arranged buyer’s showroom of her company’s recently renovated Manhattan headquarters. Despite running late for a meeting with her partners, Brosnahan walked across the shiny hardwood floors to rearrange a display shelf lined with the black nylon “vertical shopper” handbags that made up the core of the kate spade product line. The rest of the kate spade team, Brosnahan’s husband Andy Spade, and friends Elyce Cox and Pamela Bell, were already seated and had begun eating their traditional takeout …show more content…

These were the designs that became the company’s signature pieces. Most notable among them was the $200 boxy, utilitarian, black nylon over-the-shoulder bag targeted at young women ages 25-45. (See Exhibit 2 for photographs of kate spade’s products.) Brosnahan’s eye for handbags turned out to be in-sync with fashion fanatics. It was not long before stars such as Julia Roberts and Gwyneth Paltrow started carrying kate spade bags. In early 1996, Brosnahan was recognized by the Council of Fashion Designers of America (CFDA) for New Fashion Talent in Accessories, and on February 8, 1998, Brosnahan was again honored by the CFDA with the award for Best Accessory Designer of the Year. By March 1998, kate spade had gained prominence in the industry. It had sold over 100,000 handbags, enjoyed rapid growth in sales and employed 105 people. It sold its handbags through high-end retailers like Bergdorf Goodman and Neiman Marcus as well as in its own specialty retail stores located in New York and Tokyo. kate

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This document is authorized for use only in The Entrepreneurial Manager, by Professor Stuart during HBS MBA Winter Term 2009.

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spade’s founders had plans to open 10 stores by 2001 and to branch out into stationery, apparel, eyewear and fragrances.

The Handbag Industry
In 1997, handbags were a small category in the