Tapestry to Acquire Capri Holdings for $8.5B

Tapestry, the fashion conglomerate behind Coach and Kate Spade, will acquire competitor Capri Holdings in a $8.5 billion deal announced Thursday. The transaction will create an American fashion giant that — while still not quite as large as its European competitors — will be better positioned to compete in the luxury market. It brings together six fashion brands: Tapestry’s Coach, Kate Spade, and Stuart Weitzman and Capri’s Versace, Jimmy Choo, and Michael Kors. The boards of both companies have unanimously approved the acquisition, which is expected to close in 2024.

Total Retail's Take: This acquisition will broaden Tapestry's reach both domestically and internationally, strengthening its position in the luxury apparel and accessories market, particularly by bringing Versace and Jimmy Choo into the fold. Combined, the six brands currently have a presence in more than 75 countries and generate over $12 billion in annual revenue. As for the timing of the acquisition, it appears to be a long-term play, not one made to capitalize on current market conditions. In their most recent quarterly earnings calls, both Tapestry and Capri spoke of slowing consumer demand for luxury items amid economic uncertainty. Furthermore, a press release this week from the National Retail Federation (NRF) noted that growth in consumer spending is slowing. Given that backdrop, Tapestry is taking the opportunity (and risk) to bolster its product offerings and consumer reach to differentiate itself from other players in the luxury space, with the goal of capturing additional market share and customer loyalty in the process.