Tapestry, Inc., the parent company behind renowned fashion brands Coach, Stuart Weitzman, and Kate Spade New York, has accomplished a significant milestone by officially acquiring Capri Holdings Limited, a move that positions it as one of the premier multi-brand luxury conglomerates in the United States. This strategic collaboration was solidified through a definitive agreement, with Capri Holdings shareholders set to receive $57 per share in cash, amounting to a remarkable $8.5 billion valuation for the acquisition.
Founded in 1981 by designer Michael Kors, Capri Holdings embarked on its luxury journey with the eponymous brand that became the cornerstone of its diverse portfolio. In 2017, the company made waves by acquiring Jimmy Choo Ltd for $1.2 billion. Not stopping there, it rebranded as Capri Holdings from its previous name, Michael Kors Holdings Limited, and further expanded its reach by acquiring the iconic Versace in 2018 for a substantial $2.12 billion.
Joanne Crevoiserat, CEO of Tapestry, Inc., expressed her enthusiasm for the acquisition, stating in a press release, “From this position of strength, we are ready to leverage our competitive advantages across a broader portfolio of brands. The combination of Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities, and shareholders worldwide.”
Prior to the acquisition, Tapestry, Inc. reported record-breaking first-quarter revenue of $1.5 billion in 2023, marking a 2% increase from the previous year and achieving an overall 5% growth. Revenues experienced a remarkable surge of approximately 20% in the Asian markets, while North American revenue witnessed a slight decline. Notably, Tapestry, Inc.’s success in the Chinese market has been instrumental in its overall performance.
Comparably, Capri Holdings faced a 10.5% revenue decrease in its most recent fourth-quarter results. Notwithstanding, the company managed to reimburse a noteworthy $1.35 billion to its shareholders.
Through this acquisition, Tapestry, Inc. has set its sights on expanding the breadth of its portfolio by diversifying both its customer base and product offerings. Furthermore, the company aims to enhance direct-to-consumer opportunities, capitalize on cost synergies amounting to over $200 million within three years by optimizing operations and supply chain efficiencies, and generate consistently strong cash flows. These pursuits are all part of Tapestry, Inc.’s commitment to enhancing total shareholder returns.
While still smaller compared to European luxury mega-conglomerates such as LVMH and Kering, the acquisition of Capri Holdings represents a significant stride for the U.S. luxury market. Tapestry, Inc., with its well-established fashion brands and newfound synergy, is poised to elevate the American luxury industry to new heights and remain a formidable player on the global stage.
Market Capital Research 