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Coach & Kors’ Marriage of Convenience

Michael Kors successfully moved further upmarket over the past few years, but not enough to stave off a 14 percent sales decline in the most recent fiscal quarter.
Michael Kors successfully moved further upmarket over the past few years, but not enough to stave off a 14 percent sales decline in the most recent fiscal quarter. Photo: Dimitrios Kambouris/Getty Images
Lauren Sherman
August 14, 2023

If nothing else, last week’s announcement that Tapestry (the owner of Coach, Stuart Weitzman, and Kate Spade) had spent $8.5 billion to acquire Capri (the parent company of Versace, Jimmy Choo and Michael Kors) brought some drama to an otherwise lackluster American fashion market—one where middling brands often struggle for attention against their more revered and exciting European counterparts. On the face of it, this looks like a pretty logical deal—and perhaps inevitable, given the rapid consolidation of the industry. These are the two companies keeping the middle of the market warm, so why shouldn’t they band together against Big Luxury and Fast Fashion alike, all while lowering operating expenses and increasing their margins? Tapestry will undoubtedly save the $200 million in efficiencies that the company predicts—human resources, real estate, technology, back office finance people, accounting fees, etcetera—resulting in “enhanced TSR,” or total shareholder return, for those of us allergic to acronyms. 

More than anything, though, this is an amazing outcome for Capri C.E.O. John Idol, who has achieved some of the most impressive financial exits in fashion history. After a few formative years as group president of Ralph Lauren, Idol took over as C.E.O. of Donna Karan, which he helped sell to LVMH for $243 million in 2001. A year later, along with investors Lawrence Stroll and Silas Chou, who already owned Tommy Hilfiger, Idol bought Michael Kors from LVMH and the brand’s other owners for $100 million. At the time, it was posting about $20 million a year in sales. In 2011, Michael Kors went public on the New York Stock Exchange at $3.8 billion. Everyone involved got very rich.