Tapestry, the parent company of popular fashion brands Coach and Kate Spade, has made a major acquisition in the luxury market. On Thursday, Tapestry announced its purchase of Capri Holdings, the parent company of Versace and Michael Kors, for around $8.5 billion in cash. This move signals a growing trend of consolidation in the luxury market.
With a combined revenue of approximately $12 billion, the merger brings together renowned brands such as Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors. Once the transaction is completed, all these brands will operate under the name Tapestry. The acquisition is seen as a bold attempt by American fashion executives to position themselves to compete with European giants like LVMH Moët Hennessy Louis Vuitton and Kering.
The CEOs of Tapestry and Capri emphasized that this collaboration will allow their brands to reach a broader consumer base and tap into more resources. Tapestry will expand its presence in Europe, the Middle East, and Africa, while Capri’s brands will gain exposure in Asia. Furthermore, the merger presents an opportunity to increase their direct-to-consumer businesses and save $200 million in operating and supply-chain costs within three years.
Investors and analysts are closely monitoring how these two companies will integrate and the timeline for the cost savings. Executives highlighted the potential synergies that will result from pooling their resources, including digital and marketing abilities, transportation, and supply chains.
Despite the positive outlook for the merger, Tapestry’s stock fell nearly 16% on Thursday, while Capri’s shares skyrocketed by almost 56%. The deal will be financed through debt, which Tapestry plans to pay down rapidly.
With the luxury market facing a slowdown, especially in North America, this merger provides both Tapestry and Capri with an opportunity to expand into international markets. Analysts believe that the deal will also enhance Tapestry’s reputation in the luxury market, positioning the company as a true “house of luxury.”
This acquisition follows other recent developments in the luxury industry, such as the purchase of Australian fashion house Zimmerman by Advent for $1 billion and Kering’s acquisition of a stake in Valentino. Speculation also continues to swirl around a possible sale of Bergdorf Goodman to LVMH. As the luxury market evolves, fashion conglomerates are increasingly seeking ways to strengthen their positions and broaden their portfolios.