The grand tapestry of luxury fashion underwent a significant shift as Tapestry moved to acquire Capri Holdings. If fashion was an ongoing tale, this chapter has painted a daring dream of a luxury American giant challenging European stalwarts.
For the American luxury landscape, the buzzword today is consolidation. Tapestry, renowned for brands like Coach bags, Stuart Weitzman shoes, and the iconic Kate Spade, saw an opportunity in the horizon and grasped it. By folding Capri Holdings, the umbrella under which flourish names like Michael Kors, Versace, and Jimmy Choo, into its fabric, Tapestry has sown the seeds of an American luxury consortium that’s daring to compete on the same stage as European dominants.
The magnitude of this business ballet is not lost on the avid fashion observer. The transaction, worth a whopping $8.5 billion in cash, gives a significant premium to Capri shareholders, suggesting Tapestry’s confident vision of the value addition the merger promises.
But what drives Tapestry’s ambition? A mere glance at the European counterparts’ statistics — LVMH and Kering — illustrates the monumental gap. A combined annual turnover of $12 billion for the new American duo might sound impressive, but when juxtaposed against LVMH’s revenue of 79 billion euros in 2022, it pales. Furthermore, while their combined market capitalization touches $14 billion, LVMH alone stands towering at 415 billion.
Yet, it’s not the current numbers but the potential that’s intriguing. Both Tapestry and Capri see new synergies unlocking growth. Europe and the Middle East, largely dominated by European brands, beckon Tapestry. Concurrently, Capri finds its siren call in Asia, an emerging powerhouse of luxury consumers.
The key takeaway, however, is the luxury positioning. For Tapestry, aligning with Capri is more than just a financial merger; it’s a vision to shift gears. Capri’s brands hold a higher luxury cachet, a significant lure for Tapestry as it plans to move further up the luxury ladder. And while they weave this dream, there’s also a pragmatic side. Both expect operational savings to the tune of $200 million over the coming three years, ensuring they don’t just grow but thrive sustainably.
Capri’s CEO, John Idol, encapsulates this optimism, emphasizing the acceleration of their global expansion, all the while preserving their brands’ unique DNA. This sentiment is echoed by Tapestry’s director, Joanne Crevoiserat, who envisions a “powerful and global luxury house.”
It’s worth noting how both Tapestry and Capri, in isolation, have demonstrated aggressive growth. Kate Spade’s acquisition by Tapestry in 2017 for $2.4 billion, or Capri’s sequential purchases of Jimmy Choo and Versace, bear testament. But today’s scenario isn’t just about individual ambitions. It’s about collective dreams.
While the American luxury tapestry gets meticulously woven, one cannot ignore the international counterparts’ moves. LVMH’s acquisition of Tiffany in 2021 or Kering’s recent 30% stake in Valentino. The luxury fashion landscape is shifting, evolving, and expanding.
Click on this link to read this article in French version