Two prominent U.S. luxury brand conglomerates are merging, and some are wondering if the new combo may create an “American LVMH.”
On Aug. 10, Tapestry—which owns the Coach, Kate Spade, and Stuart Weitzman brands—agreed to buy rival Capri, which owns the Versace, Jimmy Choo, and Michael Kors brands.
The price was $8.5 billion, or $57 per share, which represents a 60% premium over Capri’s 30-day weighted average.
The combined company will have a presence in 75 countries and will be the fourth-largest luxury house in the world, behind LVMH, Richemont, and Kering.
Both Tapestry and Capri are heavily involved in accessories—which will constitute 67% of the new company’s private offerings, according to its investor presentation.
Together, the two companies’ six brands generate over $12 billion in annual sales and $2 billion in annual operating profit. (By contrast, LVMH controls over 70 brands, and its 2022 sales topped $85 billion.)
“Tapestry has long targeted becoming a bona fide ‘house of luxury’ like Kering or LVMH, but its current brands are near-luxe rather than true luxe,” Craig Johnson, president of Customer Growth Partners, told WWD. “Capri gives Tapestry a toehold in the true luxe world—with both Versace and Choo.”
Versace may well be the deal’s “jewel in the crown,” he added, as he feels the brand is “under-penetrated” in North America.
In a statement, Tapestry CEO Joanne Crevoiserat said that the merger “creates a new powerful global luxury house.”
Analysts generally praised the deal, though some flagged concerns. The FT noted that Tapestry is taking on significant debt to acquire Capri, and that the “struggling and not particularly prestigious” Michael Kors brand generates about 70% of Capri’s revenue.
Tapestry was originally known as Coach. It purchased Kate Spade in 1993, and Stuart Weitzman in 2015. It changed its name two years later.
Similarly, Capri began life as Michael Kors. It bought shoemaker Jimmy Choo in 2017, and Versace in 2018, after which it became known as Capri.
Top: a photo shoot from Versace (photo courtesy of Tapestry)
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