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Tapestry, parent company of Coach, is in the process of acquiring Capri Holdings, owner of the Michael Kors and Versace brands. The deal, valued at $8.5 billion, is designed to create a strong American competitor to the sector’s powerful European players, LVMH and Kering.
Is Capri over? That’s THE question on everyone’s lips, as the multinational Tapestry, which owns the Coach, Kate Spade and Stuart Weitzman brands, has just announced the signing of a “definitive agreement” to buy Capri Holdings (Michael Kors, Versace and Jimmy Choo).
In trading before the opening of the New York Stock Exchange this morning, Capri shares climbed 31%, while Tapestry shares gained 1.2%.
At yesterday’s close, Capri had a market capitalization of $4 billion and Tapestry around $10 billion, according to Refintiv data. This financial exchange could value the group that owns Michael Kors at between $7 and $9 billion.
It will propel Tapestry into the ranks of a major luxury goods group, putting it on a par with its European counterparts.
According to GlobalData analyst Neil Saunders, the new group is set to become the world’s fourth-largest luxury goods group, with a market share of around 5.1%, behind French giants LVMH, Kering and Chanel.
In the Americas alone, it would be in second place (6%), well behind LVMH (21.4%).
The deal could also give a new impetus to both companies, at a time when the US retail sector is facing weaker demand, due to inflation, and an uneven recovery in the Chinese market.
“Weaker demand has put pressure on Tapestry and Capri, who are now looking to international markets to support their growth. There’s more security in embarking on bold international projects together” said Neil Saunders.
According to Capri CEO John Idol, the two companies are “very complementary” in terms of geographical distribution, with one having a stronger presence in Asia – Tapestry generates 65% of its business in America and 29% in Asia – and the other more present in Europe – Capri generates 56% in America, 28% in Europe/Middle East and 16% in Asia.
Combined sales exceed $12 billion, and the new entity will employ over 33,000 people.
Tapestry: future LVMH competitor?
Tapestry, formerly known as Coach Inc, bought the Kate Spade handbag brand in 2017 for $2.4 billion.
That same year, Capri, previously known as Michael Kors, snapped up British brand Jimmy Choo for $1.2 billion. A year later, the group acquired Italian fashion house Versace for $2.2 billion.
At a time when Europe’s largest luxury groups, such as LVMH and Kering, are gradually expanding their portfolios by acquiring high-end brands, Tapestry’s acquisition of Capri could be the start of a resurgence in financial transactions in the American luxury sector.
After acquiring blue jeweler Tiffany & Co in 2021 for $15.8 billion, LVMH has decided to continue investing in the jewelry sector by buying French group Platinium Invest. For its part, Kering has declared that it is taking a 30% stake in the Italian brand Valentino.
With its new and existing labels, will Tapestry be able to overshadow the French and European luxury giants?
Experts disagree, especially as Tapestry’s initial portfolio of Coach and Kate Spade are not necessarily perceived as luxury brands. In this game, the big Western houses like Dior and Chanel have the advantage.
The only brands with a luxury aura on both sides of the Atlantic remain Tiffany & Co, now under the LVMH umbrella, and Ralph Lauren, which for the time being retains its independence.
However, the rise of luxury could come from Versace or even Michael Kors – the driving force behind Capri Holdings – but only if the jet-setting brand’s image of exclusivity is overhauled.
A strategy that will undoubtedly involve a price increase, but not the only one.
Finally, the newly-formed Tapestry group, which is essentially focused on the fashion and leather goods sector, looks set to be far less diversified than the LVMH group and its 75 Houses. Since its foundation in 1987, the group has been present in fashion and accessories, as well as wines and spirits.
Thanks to their licensing agreements, the newcomers have enabled the group to strengthen its position in perfumes and cosmetics, as well as in interior design and hotels via Versace. For its part, the acquisition of Jimmy Choo enables the group to penetrate the footwear market with its first iconic brand.
Read also >Results: Tapestry pleasantly surprises, Capri disappoints
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Tapestry, parent company of Coach, is in the process of acquiring Capri Holdings, owner of the Michael Kors and Versace brands. The deal, valued at $8.5 billion, is designed to create a strong American competitor to the sector’s powerful European players, LVMH and Kering.
Is Capri over? That’s THE question on everyone’s lips, as the multinational Tapestry, which owns the Coach, Kate Spade and Stuart Weitzman brands, has just announced the signing of a “definitive agreement” to buy Capri Holdings (Michael Kors, Versace and Jimmy Choo).
In trading before the opening of the New York Stock Exchange this morning, Capri shares climbed 31%, while Tapestry shares gained 1.2%.
At yesterday’s close, Capri had a market capitalization of $4 billion and Tapestry around $10 billion, according to Refintiv data. This financial exchange could value the group that owns Michael Kors at between $7 and $9 billion.
It will propel Tapestry into the ranks of a major luxury goods group, putting it on a par with its European counterparts.
According to GlobalData analyst Neil Saunders, the new group is set to become the world’s fourth-largest luxury goods group, with a market share of around 5.1%, behind French giants LVMH, Kering and Chanel.
In the Americas alone, it would be in second place (6%), well behind LVMH (21.4%).
The deal could also give a new impetus to both companies, at a time when the US retail sector is facing weaker demand, due to inflation, and an uneven recovery in the Chinese market.
“Weaker demand has put pressure on Tapestry and Capri, who are now looking to international markets to support their growth. There’s more security in embarking on bold international projects together” said Neil Saunders.
According to Capri CEO John Idol, the two companies are “very complementary” in terms of geographical distribution, with one having a stronger presence in Asia – Tapestry generates 65% of its business in America and 29% in Asia – and the other more present in Europe – Capri generates 56% in America, 28% in Europe/Middle East and 16% in Asia.
Combined sales exceed $12 billion, and the new entity will employ over 33,000 people.
Tapestry: future LVMH competitor?
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Tapestry, parent company of Coach, is in the process of acquiring Capri Holdings, owner of the Michael Kors and Versace brands. The deal, valued at $8.5 billion, is designed to create a strong American competitor to the sector’s powerful European players, LVMH and Kering.
Is Capri over? That’s THE question on everyone’s lips, as the multinational Tapestry, which owns the Coach, Kate Spade and Stuart Weitzman brands, has just announced the signing of a “definitive agreement” to buy Capri Holdings (Michael Kors, Versace and Jimmy Choo).
In trading before the opening of the New York Stock Exchange this morning, Capri shares climbed 31%, while Tapestry shares gained 1.2%.
At yesterday’s close, Capri had a market capitalization of $4 billion and Tapestry around $10 billion, according to Refintiv data. This financial exchange could value the group that owns Michael Kors at between $7 and $9 billion.
It will propel Tapestry into the ranks of a major luxury goods group, putting it on a par with its European counterparts.
According to GlobalData analyst Neil Saunders, the new group is set to become the world’s fourth-largest luxury goods group, with a market share of around 5.1%, behind French giants LVMH, Kering and Chanel.
In the Americas alone, it would be in second place (6%), well behind LVMH (21.4%).
The deal could also give a new impetus to both companies, at a time when the US retail sector is facing weaker demand, due to inflation, and an uneven recovery in the Chinese market.
“Weaker demand has put pressure on Tapestry and Capri, who are now looking to international markets to support their growth. There’s more security in embarking on bold international projects together” said Neil Saunders.
According to Capri CEO John Idol, the two companies are “very complementary” in terms of geographical distribution, with one having a stronger presence in Asia – Tapestry generates 65% of its business in America and 29% in Asia – and the other more present in Europe – Capri generates 56% in America, 28% in Europe/Middle East and 16% in Asia.
Combined sales exceed $12 billion, and the new entity will employ over 33,000 people.
Tapestry: future LVMH competitor?
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