Tapestry and Capri Terminate $8.5 Billion USD Merger

by

As a long-time admirer of the fashion industry, I find myself both intrigued and slightly disheartened by the recent turn of events involving Tapestry, Inc. and Capri Holding Ltd. The termination of their proposed merger is certainly a blow to those who envisioned a formidable American counterpart to European powerhouses like LVMH or Kering.

The company Tapestry, Inc., which oversees Coach and Kate Spade brands, has abandoned plans to purchase Capri Holding Ltd., a corporation that manages Michael Kors, Versace, and Jimmy Choo, following the US Federal Trade Commission’s successful prevention of the merger. This announcement was made on Thursday.

The two large corporations chose to cancel their $8.5 billion deal following a court order that stopped the acquisition. This decision was made because the judge argued that the merger would remove competition in the mid-tier handbag market. Initially, Tapestry planned to challenge the court’s verdict, but both companies determined it was more beneficial for them to end the merger. The prolonged legal proceedings were expected to extend beyond the deal’s deadline of February 10, 2025.

As a fervent admirer, I can’t help but ponder about the potential impact if the sale had gone through. It could have propelled our nation towards creating a formidable parent company, similar to Europe’s LVMH or Kering. Yet, it’s essential to acknowledge that even in this hypothetical merger, the American fashion conglomerate would have still been playing catch-up, given the substantial lead held by these European giants. For instance, in 2022, Kering reported sales of approximately €20.35 billion EUR, while LVMH boasted an impressive €79.2 billion EUR in sales.

Each business, Tapestry and Capri, find themselves in distinct financial situations. Tapestry Corporation, for one, anticipates a revenue of over $6.75 billion USD by the end of the 2025 fiscal year, generating approximately $1.51 billion USD in sales during the first quarter alone. It’s worth mentioning that Coach was the leading contributor to their total sales, with its revenue increasing by 1% to reach $1.2 billion USD within this period. Meanwhile, details about Capri’s financial status weren’t specified.

Joanne Crevoiserat, the CEO of Tapestry, stated that they’ve consistently had various avenues for expansion, and their recent decision provides clarity on their future plans. Leveraging our strong first quarter performance, we aim to act swiftly and courageously to boost growth in our core business. Tapestry continues to stand firm, with its unique brands, flexible infrastructure, dedicated workforce, and abundant cash flow.

In contrast to other high-end fashion brands, Capri experienced a decrease of about 16.4% in its revenue during the second quarter of the 2025 fiscal year. On the other hand, Versace and Michael Kors reported declines of 28.2% and 16%, respectively, while Jimmy Choo saw a growth of approximately 6%.

As the merger deal is off the table now, I’m fully committed to shaping Capri’s future and our three prestigious luxury brands – Versace, Jimmy Choo, and Michael Kors. Over the last 18 months, our company has undergone significant changes, and we’ve been working diligently to revitalize these iconic labels. Our primary focus is enhancing brand appeal by crafting engaging narratives, offering captivating products, and delivering an exceptional omni-channel shopping experience for our customers.

Read More

2024-11-15 00:57