Birth of an American Luxury Giant
The acquisition of Capri Holding by Tapestry Inc was confirmed on October 25th. This merger, valued at $8.5 billion and expected to be completed in 2024, will create the fourth-largest luxury empire in the world.
By Eva Morletto31 octobre 2023
Tapestry, the owner of fashion houses Coach, Kate Spade, and Stuart Weitzman, had its takeover offer accepted by Capri Holding shareholders, the parent company of Versace and Michael Kors. This approval marked the final step in formalizing the creation of the fourth-largest luxury empire globally and the largest in North America, set to take place in 2024.
Following this merger, the new conglomerate is estimated to be valued at around $8.5 billion. This valuation could reshape the dynamics of the luxury sector in the United States. Until now, the American market had not seen an entity of this scale potentially influencing luxury market trends while integrating promising new brands due to its financial clout. The enthusiasm in the American sector for this merger is partly driven by the shock felt in the United States when the iconic jeweler Tiffany & Co., a symbol of American luxury, was acquired in 2021 by the French giant LVMH. Since then, the United States seems eager to protect its major brands from European and Asian market interests. The announcement of the merger was made this summer and has now culminated in the creation of this new mega-entity.
Tapestry had already demonstrated its ambition to safeguard American brands with the acquisition of the leather goods brand Coach, founded in 1941. It appears that the future strategy will continue in this direction, adding trendy brands to its portfolio to attract new customers or historic houses to enhance the group's prestige.
For the fiscal year 2024, Tapestry anticipates financial results approaching $6.9 billion, representing a 3% to 4% growth compared to the previous fiscal year ending this summer. These forecasts remain cautious, taking into account the slowdown in demand for leather goods in the American market and the effects of inflation impacting luxury products in recent months. On the other hand, Capri Holdings has withdrawn its outlook for 2024 due to the ongoing transaction with Tapestry Inc., and it has not issued a forecast for the next fiscal year.
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