Liz Claiborne

(LIZ)

agreed to buy handbag maker Kate Spade for $124 million, including retirement of debt at closing.

New York-based Spade generated sales of $84 million for the year ended June 30.

"Kate and Andy Spade, along with Elyce Arons and Pamela Bell, have created a terrific brand with a strong aesthetic and widespread consumer recognition," the company said. "Our job now is to maintain the essence of Kate Spade while driving it to the next level -- something we have done quite successfully with other acquired brands in our portfolio. We look forward to collaborating with Kate and the team."