Topline
The luxury conglomerate behind Coach, Kate Spade and Stuart Weitzman is growing by three more iconic brands with the $8.5 billion purchase of Michael Kors-founded Capri Holdings Limited, merging two American fashion groups amid news that U.S. luxury spendings has slowed in favor of growth in Europe and Asia.
Key Facts
Tapestry, Inc. the holding company created after Coach bought Stuart Weitzman and Kate Spade New York in 2015 and 2017, respectively, said Wednesday it will buy Capri—owner of Versace, Jimmy Choo, and Michael Kors—to create a single conglomerate that combined generates $12 billion in annual sales.
Capri Holdings shareholders will receive $57 per share in cash in the deal, which Tapestry CEO Joanne Crevoiserat said will create a “powerful global luxury house” in the vein of luxury giant LVMH, owned by Europe’s richest person Bernard Arnault, and Kering, which owns Gucci, Balenciaga and Yves Saint Laurent.
Capri shares surged 58% ahead of open Thursday while Tapestry shares were flat. Tapestry, Inc. reported a record first quarter revenue of $1.5 billion this year; Capri is expected to share its results in a joint call with Tapestry Thursday morning.
Emily Blunt and Michael Kors attend the 2023 Met Gala celebrating at The Metropolitan Museum of Art … [+]
Key Background
Coach and Michael Kors are both known as fashion brands that run the gamut—their bags can be bought at department stores for relatively affordable luxury prices but they also have a foothold in the high-fashion world. Michael Kors fashion shows are often attended by stars like Kate Husdon and Ellen Pompeo—Emily Blunt attended this year’s Met Gala with the designer in a custom look—and Coach can count famous fans like Jennifer Lopez, Kaia Gerber and Megan Thee Stallion. Tapestry’s expansion will significantly up its market share but likely still puts it out of reach of conglomerates LVMH, which reported an annual revenue of $79.2 billion last year, and Kering, which reported $20.3 billion in 2022 sales. News of the merger comes at a time other luxury conglomerates are reporting slowing American business. LVMH said last month that sales slid 1% in the second quarter from the same period last year due to falling sales in the U.S. while experiencing double-digit sales growth in all other markets — with an 18% increase in Europe and 34% increase in Asia (excluding Japan). Kering reported a 2% overall growth in the first half of 2023 but saw falling sales in North America, as did Richemont, which owns Cartier, Chloé and Montblanc, and Prada, which saw a 25% growth in Asia Pacific in the first half of 2023 compared to a 1% drop in year-over-year sales in the Americas.
Bella Hadid walks the runway of the Versace Fashion Show during the Milan Fashion Week Womenswear … [+]
Forbes Valuation
Michael Kors hit the $1 billion net worth mark in 2014 but dropped off the Forbes billionaires list in 2015. LVMH is owned by Bernard Arnault, the second-richest man in the world with a $227.7 billion net worth Thursday, and François Pinault, founder and honorary chairman of Kering, is worth an estimated $38.8 billion and is the world’s 30th richest person.
Crucial Quote
“They don’t want to wear your product as a badge,” Joanne Crevoiserat told Forbes of luxury fashion shoppers last week. “They want to wear your product to express their own individuality.”
Models pose during the Kate Spade Fall Winter 2023-2024 Presentation at The Whitney Museum of … [+]
Further Reading
Luxury Fashion Sales Buoyed By Asia As U.S. Spending Slows (Forbes)
LVMH earnings suggest luxury spending is suddenly slowing in the U.S. (CNBC)
Gucci CEO Departs As Brand Lags Behind: Here’s How The Top Luxury Fashion Brands Are Doing (Forbes)
