The parent company of Michael Kors, Capri, is set to be acquired by the owner of Coach, Tapestry, in an $8.5 billion deal. Tapestry and Capri have been striving to establish their own collections of high-end brands, but they have struggled to match the diversity and influence of European luxury conglomerates like LVMH and Kering SA. These European giants own a wide range of brands spanning various sectors, including apparel, jewelry, watches, and alcohol.
The consolidation of the six brands under the acquisition aims to create a powerful global luxury house, presenting an exceptional opportunity to generate greater value for customers, employees, communities, and shareholders worldwide, according to Tapestry CEO Joanne Crevoiserat.
Tapestry’s acquisition of Capri is primarily an effort to effectively compete with the leading players in the luxury market, particularly in the handbags and shoes categories, where both Coach and Michael Kors excel. In addition to Michael Kors, Tapestry also owns the Stuart Weitzman footwear brand, while Capri possesses Jimmy Choo.
As noted by Wells Fargo analyst Ike Boruchow, the inclusion of Michael Kors solidifies Tapestry’s position as the dominant player in the accessible luxury handbag market in the United States. The accessible luxury segment, of which the companies’ products fall under, offers more affordable options compared to high-end brands like Louis Vuitton from LVMH. However, the accessible luxury sector has faced challenges in the US in recent quarters due to decreasing spending among aspirational shoppers amidst the decline of the pandemic-induced luxury boom.
Unique Perspective: As the acquisition of Capri by Tapestry takes place, the luxury market undergoes an intriguing transformation. This consolidation of powerful brands not only presents an opportunity for Tapestry to enhance its global presence, but it also underscores the intensifying competition between American conglomerates and their European counterparts. With the accessible luxury segment facing challenges, it will be interesting to observe how Tapestry leverages its expanded portfolio to navigate the evolving consumer landscape.
