On August 10th, American multinational luxury fashion-holding Tapestry made a startling announcement regarding challenging large European rivals. The Coach retailer of luxury handbags and accessories will buy Capri Holdings, which owns fashion brands Michael Kors, Jimmy Choo, and Versace.
Tapestry, known as Coach, has bought multiple brands over the past years. In 2017, it bought handbag maker Kate Spade for $2.4 billion, making it the parent company of three major brands: Coach New York, Kate Spade New York, and Stuart Weitzman.
As per the deal, Tapestry will buy Capri Holdings for $8.5 billion (€7.7 billion) to create a U.S. fashion house that can compete with its larger European counterparts.
With the succession of accretions as U.S. players seek more sway in Europe, big fashion has become even more massive. The new deal will put Tapestry in a better position to do just that, encompassing rivals like LVMH and Kering.
Brand-Evolving Transaction for Tapestry
“The combination of Coach, Kate Spade, and Stuart Weitzman, together with Versace, Jimmy Choo, and Michael Kors, creates a new powerful global luxury house.” Tapestry CEO Joanne Crevoiserat said in a canned speech.
Moreover, both companies have acquired separate levels of success. Now, the combined company will operate in 75 countries with global annual sales of more than $12 billion (€10.9 billion). Michael Kors bags have a market value of around $4 billion (€3.6 billion), while Tapestry has nearly $10 billion (€9.1 billion).
Following this potential acquisition, joining Capri is a strategic move for Tapestry on many levels.
Morningstar analyst Jelena Sokolova hinted at this collaboration, “Sticky inflation and weaker domestic demand in the U.S retail market have put pressure on Tapestry and Capri. Hence, both wanted a new upfront to bolster growth in the international market. Thus, embarking on bold international plans would be a more secure idea.”
Hence, this collaboration would mark a revival of the brands in the U.S. luxury space, giving a tough time to European collaterals.
