Coach clutch & Jimmy Choos… a 2000s fashion icon. Yesterday, Coach parent Tapestry agreed to buy rival US luxury house Capri for $8.5B. Capri owns luxe names like Jimmy Choo, Versace, and Michael Kors. Tapestry’s collection includes designers like Stuart Weitzman, Kate Spade, and Coach. Tapestry and Capri earn about $12B in combined annual sales, and Coach alone hopes to bring in $8B by 2025. Now Tapestry wants to use its new bag of brands to go from fashion house to fashion mansion:
#Synergy: By joining, both companies are expected to save $200M in operating and supply-chain costs within the next three years. Capri shares soared 55% after the announcement, while Tapestry plunged 16%.
Not your mom’s leather bag… For years, US luxury houses have lagged behind European rivals like LVMH, which owns pricier aspirational brands like Louis Vuitton, Fendi, and Dior. As luxury spending cools, brands are revamping to stay in vogue. Lately, Coach has shed its signature leather monogrammed bags for quirkier prints with sustainable materials (see: Coachtopia). Coach has also launched viral TikTok and IG campaigns. It’s working: In May, nearly half of Tapestry's 1.2M new North American customers were Zillennials. Coach is the #1 handbag for teens for the second year in a row, and Capri’s Michael Kors has been in the top three for years.
The best tapestries have many strands… to cover more ground. Michael Kors can join Coach in drawing younger, more diverse shoppers, while Versace and Jimmy Choo can help Capri attract wealthier international customers. Fashion consolidation is trending: last month Gucci parent Kering added another label to its tote by taking a 30% stake in Valentino. Estée Lauder bought fashion house Tom Ford last year for $3B.