Editor’s Note
Tapestry’s $8.5 billion acquisition of Capri Holdings aims to forge America’s first major multi-brand luxury group, positioning Coach’s parent company as a dominant domestic force in global fashion.
The parent company of Coach, Tapestry, has become the largest luxury group in the United States by acquiring Capri.
Tapestry Inc., the parent company that owns fashion brands Coach and Kate Spade, has acquired Capri Holdings, the owner of Michael Kors, for $8.5 billion (approximately 11.322 trillion won), laying the groundwork to become the first major multi-brand luxury conglomerate based in the United States.
Tapestry, which stated that this acquisition will create America’s premier fashion house capable of effectively competing with large European rivals in the global luxury market, plans to pay $57 per share (approximately 75,924 won) in cash, representing a premium of nearly 65%.
American luxury companies have consistently lagged behind European luxury giants like LVMH, which owns 75 brands including the American jeweler Tiffany and fashion brands Louis Vuitton and Dior.
This acquisition brings together Tapestry’s brands—Coach, Kate Spade New York, and Stuart Weitzman—with Capri’s Michael Kors, Jimmy Choo, and Versace brands under one roof, consolidating a total of six luxury brands.
This merger could provide significant strength to both companies at a time when the U.S. retail sector is suffering from sluggish domestic demand due to weakened consumer spending from entrenched inflation and a slowdown in the recovery of China, a major luxury market.
Michael Kors, which accounts for the largest portion of Capri’s revenue, has experienced a steeper sales decline than some luxury brands in recent quarters as inflation has reduced mass-market shoppers in the U.S., and even enthusiastic regular customers have begun to pull back on purchases following a sharp drop in handbag consumption after the COVID-19 pandemic.
However, Tapestry’s management said there is an opportunity to learn lessons from the success stories of the Coach and Kate Spade brands.
Through the acquisition of Capri, Tapestry aims to diversify its customer and product offerings to expand its portfolio scope, increase direct-to-consumer (DTC) opportunities, realize over $200 million in operating cost synergies within three years of deal completion through cost savings and supply chain efficiency, create a highly diversified, strong, and consistent cash flow, and work towards enhancing total shareholder returns.
In fact, both companies have grown through mergers and acquisitions.
In 2017, Tapestry, then known as Coach Inc., acquired handbag manufacturer Kate Spade New York for $2.4 billion (approximately 3.1968 trillion won). Capri Holdings, a company founded in 1981 by designer Michael Kors, acquired British shoe manufacturer Jimmy Choo for $1.2 billion (approximately 1.5984 trillion won) in 2017 and, a year later, acquired Italian luxury brand Versace for $2.2 billion (approximately 2.9304 trillion won).
Tapestry’s acquisition of Capri could signal a revival of deals in the American luxury industry while European conglomerates acquire high-end brands.
Last month, French luxury group Kering, struggling with sales recovery of its star brand Gucci, announced it would acquire a 30% stake in Italian luxury brand Valentino. The world’s largest luxury group, LVMH, completed its $15.8 billion (approximately 21.0456 trillion won) acquisition of Tiffany in early 2021.
Although the scale of the merger and acquisition is still much smaller compared to European luxury conglomerates LVMH and Kering, it is a significant move in the American luxury market.
