Tapestry and Capri Announce a Luxury Mega Merger

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Tapestry, the fashion company that owns Coach and Kate Spade, has announced its acquisition of Capri Holdings, the parent company of Versace and Michael Kors, for approximately $8.5 billion. This move reflects the ongoing consolidation in the luxury market. Capri shareholders will receive $57 per share in cash, and the combined revenue of the two conglomerates will amount to $12 billion.

The deal represents a partnership between two major American companies, each with their own well-known luxury brands. This collaboration comes at a time when high-end retailers are seeking growth opportunities, particularly in light of decreased discretionary spending by U.S. consumers. Tapestry and Capri together encompass a total of six brands, which include Jimmy Choo and Stuart Weitzman.

For Tapestry, the acquisition will enable the company to expand its presence in Europe, the Middle East, and Africa, while also giving Capri’s brands greater exposure in Asia.

Both CEOs emphasize that the merger will allow their handbags, shoes, and apparel to reach a broader consumer base across 75 countries. They also expect to tap into more resources, increase their direct-to-consumer business, and save $200 million in operating and supply-chain costs within three years.

Joanne Crevoiserat, the CEO of Tapestry, expresses her belief that bringing the six brands together will create a powerful global luxury house and unlock unique opportunities for value growth. Similarly, John D. Idol, the Capri CEO, sees the merger as an opportunity to expand their global reach while preserving their brand identity.

On the stock market, Tapestry’s stock experienced a 3 percent decline before the market opened, while Capri’s stock rose nearly 60 percent. The potential deal comes at a time when the luxury market is facing a slowdown, especially in North America. This has prompted Tapestry and Capri, both of which are seeking growth, to focus on international markets. Analysts believe that joining forces as a larger entity provides more security for their bold international plans.

The deal also enhances Tapestry’s prestige in the luxury market. As Craig Johnson, the president of consultancy Customer Growth Partners, explains, Tapestry has long aimed to become a leading “house of luxury” similar to European companies like Kering and LVMH. While Tapestry’s current brands are considered near-luxury, the acquisition of Capri gives them a foothold in the world of true luxury. Over time, Versace may emerge as the standout brand within Tapestry’s portfolio.

In its most recent quarter, Tapestry reported a 13 percent increase in net sales, while Capri’s revenue for the same period fell by 10.5 percent. Tapestry is scheduled to release its quarterly and full-year earnings on August 17.

Overall, this acquisition not only strengthens Tapestry’s position in the luxury market but also offers opportunities for growth, increased global reach, and cost savings for both companies.

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