Coach Parent Tapestry Stock Soars, Capri Falls as Brands Call Off Merger

Key Takeaways

• The stocks of Tapestry and Capri Holdings moved in opposite directions Thursday after the brands called off a planned merger.
• Tapestry, which owns Coach and Kate Spade, said it will shift its capital to an expanded stock buyback program.
• Capri, the owner of Versace and Michael Kors, said it plans to introduce new marketing efforts and refocus its product line to improve sales.

Shares of Tapestry (TPR) surged Thursday morning while Capri Holdings (CPRI) stock slipped after the parent companies of a number of luxury brands called off their planned merger over ongoing legal challenges.

Tapestry said Thursday that legal challenges to the merger first announced in August 2023 remain "uncertain and unlikely to be resolved by the February 10, 2025 outside date." Last month, a judge sided with the Federal Trade Commission (FTC), which sued to block the merger on the grounds that it would lead to less competition and higher prices for consumers.

Tapestry Shifting To Buybacks, Capri To New Marketing, Product Efforts

Tapestry, which owns a number of brands including Coach and Kate Spade, said that it plans to reallocate capital now that the deal has been called off, announcing an additional $2 billion stock buyback to its outstanding $800 million on its prior authorization.

Capri Holdings, the owner of Versace, Michael Kors, and Jimmy Choo, said it plans to alter its strategies to focus on growing its own brands now that the merger is off. The shifts include new marketing efforts, a changing retail footprint, and a focus on "aligning product offering to better meet consumer preferences."

Both companies reported earnings last week, with Capri reporting lower revenue and profit than last year as demand for luxury goods was "softening," Chief Executive Officer (CEO) John Idol said. However, Tapestry beat estimates and lifted its projections for the full fiscal year.

Tapestry shares soared more than 11% to $57.19, and have gained 55% since the start of the year. Capri shares, however, slipped 1.3% to $19.40, and are down more than 60% in 2024.

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