An American fashion mega deal was announced today, August 10, in which Tapestry, the parent company of Coach, Kate Spade and Stuart Weitzman, will acquire Capri Holdings, home to Michael Kors, Jimmy Choo and Versace.

The purchase price is $8.5 billion and is not subject to any financial conditions. Tapestry secured $8 billion from the Bank of America and Morgan Stanley to finance the deal which will not close until 2024.

Capri, which has a market cap of just over $4 billion, reported revenues of $5.62 billion in fiscal 2023, down 0.7 per cent on the previous year’s record $5.65 billion. This performance is very subpar in the high-end luxury market, which has had a strong rebound in a post-COVID luxury retail landscape.

Softening Entry-Tier to Luxury Brand Purchases in America

2023 has witnessed some softening of the luxury tier in America, where the aspiring luxury customer who buys leather goods and beauty/fragrance products as entry into brands like Louis Vuitton or Dior is spening less. Credit card balances are also at an all-time high in America.

Capri’s revenues decreased 10.5 percent in first quarter 2023, reports Vogue Business. The companies anticipate saving $200 million in costs, due to greater supply chain efficienties and savings from operating costs.

“We are ready to leverage our competitive advantages across a broader portfolio of brands,” said Tapestry CEO Joanne Crevoiserat in a statement. “The combination of Coach, Kate Spade, and Stuart Weitzman together with Versace, Jimmy Choo, and Michael Kors creates a new powerful global luxury house, unlocking a unique opportunity to drive enhanced value for our consumers, employees, communities, and shareholders around the world.”