Why Coach’s owner is buying Versace’s parent company: Tapestry, also behind Kate Spade, has acquired Capri for US$8.5 billion, adding Jimmy Choo and Michael Kors to its luxury fashion portfolio

Aug 11 , 2023

Dua Lipa and Donatella Versace posing for Versace’s High Summer La Vacanza women’s collection. Photo: Handout

Tapestry, the owner behind brands like Coach, Kate Spade and Stuart Weitzman, has just announced that it’s acquiring Michael Kors’ parent company Capri for US$8.5 billion in an all-cash deal

This puts the new global fashion giant in the same ring as LVMH, which owns Louis Vuitton, Dior and Tiffany, and Kering, home to Gucci and Yves Saint Laurent, as more conglomerates look to acquire

Tapestry, the US owner of lifestyle brands including Coach and Kate Spade, said Thursday it will acquire Michael Kors’ parent company Capri for US$8.5 billion, creating a new global fashion giant to compete with European powerhouses.

The unified company will also include Tapestry’s Stuart Weitzman and Capri’s Jimmy Choo – both prominent shoe brands – as well as Versace, a go-to name for Hollywood A-listers looking to make a splash on red carpets.

That will give Tapestry an upscale portfolio with multiple brands focused on shoes and handbags, as well as a strengthened apparel offering with Versace and Kors, also a celeb favourite.

The merger “creates a new powerful global luxury house”, said Tapestry chief executive Joanne Crevoiserat.

The all-cash takeover aims to boost sales by combining customer data streams, broadening geographic reach and achieving some US$200 million in annual cost savings within three years of the deal closing, a joint press release said.

Tapestry, the luxury fashion company that owns Coach and Kate Spade, has bought Capri Holdings, the parent of Versace and Michael Kors. Photo: AFP

Executives highlighted Tapestry’s superior direct-to-consumer business as an area of potential growth for Capri, which garners more sales in Europe compared with Tapestry, which is stronger in Asia.

Both groups rely on the Americas for a majority of sales, according to a Tapestry presentation. “We can learn a lot from how they [Capri] built their brands in Europe,” Crevoiserat said on a conference call with analysts. “It’s about taking iconic brands with real heritage and design and craftsmanship and combining them with our modern consumer engagement platform,” Crevoiserat said. “That will yield more innovation, more connectivity and more relevance.”

CFRA Research analyst Zachary Warring described Capri’s brands as “maybe half a step up” on the luxury scale from Tapestry’s, with a slightly wealthier customer profile. The 59 per cent premium paid on Capri shares constitutes a “solid price”, but Warring cautioned that it could be “at least three to five years before you start to see real gains” at Tapestry, whose shares fell sharply.