4 months ago • 2 mins
What’s going on here?
Tapestry, the owner of Coach, announced it’s buying rival luxury firm Capri on Thursday – and that could be a stitch in time.
What does this mean?
Tapestry and Capri, both collectors of luxury brands, have faced their share of headwinds, especially with the US’s finicky consumers. And now it seems they’re hoping there’s strength in numbers. See, Tapestry’s laying down a cool $8.5 billion to bag Capri – a price tag that’s about 65% higher than it was worth before the announcement. This fashion fusion brings together six big brands: Coach, Kate Spade, Stuart Weitzman, Versace, Jimmy Choo, and Michael Kors. And the result is a style titan strutting in 75 countries, with yearly sales that make even the ritziest brands blush, at over $12 billion. And the cherry on top: the newly merged firm is eyeing a whopping $200 million in cost savings within three years.
Why should I care?
The bigger picture: B-list bling.
With this merger, the firm’s got its European competitors like LVMH and Kering in its crosshairs. But there’s a catch: even with this power move, it’ll still be playing catch-up to those European elites, who are involved in everything from jewelry and watches to alcohol. And while its new scale should help it boost its brands, Tapestry and Capri’s main clientele aren't the ultra-wealthy caviar crowd, but the ‘comfortable luxury’ lot – who are currently tightening their designer belts a tad.
Zooming out: Ready, set, spend.
One reason for those tightened purse strings is that prices have been on the up and up. But there were more signs of hope last month: US consumer prices rose by 3.2% compared to July 2022, a tad below what the number crunchers predicted. And that little ray of sunshine has got market mavens doubling down on bets that the Federal Reserve will keep interest rates steady next month.
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