Tapestry (NYSE:TPR), the fashion conglomerate behind Coach and Kate Spade, will acquire competitor Capri Holdings (NYSE:CPRI) in a $8.5-billion deal announced on Thursday.
The deal will create an American fashion giant that — while still not quite as large as its European competitors — will be better positioned to compete in the luxury market.
It brings together six fashion brands: Tapestry’s Coach, Kate Spade and Stuart Weitzman and Capri’s Versace, Jimmy Choo and Michael Kors.
Together, the company will have the size and scale to reach more customers across the globe and better compete in the luxury market, Tapestry CEO Joanne Crevoiserat said on a call Thursday morning. She said the combination pulls together “six iconic brands” that have a presence in over 75 countries and drive over $12 billion in annual revenue.
The deal comes as Tapestry and Capri have seen weaker business in North America. In quarterly reports in May, both companies spoke about American consumers becoming more cautious around spending.
Capri, in particular, has been hit by slowing sales. Its shares hit a 52-week low in late May as it cut its forecast. On an earnings call, the company said it saw weaker sales not only of Michael Kors, but also of its luxury brands Versace and Jimmy Choo, particularly at department stores. The company’s CEO John Idol said at the time that the company expected that softness to continue through the summer.
TPR shares sank $3.90, or 9.5%, to $37.34, while CPRI shares leaped $19.64, or 56.8%, to $54.20.
Related Stories
