Coach Parent Tapestry Will Launch A New Round Of Takeover

According to the world clothing and shoe net, with the strong recovery of performance,

The parent company Tapestry group will launch a new round of acquisitions.

Barron's analysts recently predicted that Tapestry group's stock price will continue to rise by 20%, and in order to further expand.

Matrix and enhance operational efficiency, the group will soon acquire new brands.

The agency continued to point out that the Tapestry group's revenue in the current fiscal year will grow by 31% to 5 billion 900 million dollars, and its growth in fiscal 2019 will be 4%.

After the news release, Tapestry group (NYSE:TPR) shares rose 1.24% to $53.7 per share, with a market value of about $15 billion 300 million.

According to the second quarter results released by Tapestry group, its sales rose 35% to 1 billion 790 million US dollars in the three months ended December 30th, exceeding the 1 billion 770 million US dollars expected by Wall Street and 66% gross profit margin. Net profit fell 68.2% to 63 million 200 thousand dollars from the acquisition cost of Kate Spade.

Among them, the core brand Coach sales rose 2% to 1 billion 230 million U.S. dollars over the same period, around the world

Business grew.

Susquehanna financial group analyst Bill Dreher analyzed the positive performance of the quarter, mainly due to the continued popularity of Coach products, and the huge influence of the brand ambassador, American singer and actress Selena Gomez, in the millennial generation of consumers.

He further pointed out that the Tapestry group is currently facing the test of whether it can get rid of Coach's traditional mode of leather products growth and create more diversified categories for the brand.

Judging from the current situation, the pformation of Coach has achieved initial success.

In addition, Tapestry group's newly acquired brand Kate Spade is also showing strong growth potential.

After buying Kate Spade for $2 billion 400 million in July last year, the group had once had a negative impact on profits because of acquisitions.

After the completion of the paction, Tapestry group began to reduce sales promotion efforts and appoint new creative director Nicola Glass to stimulate sales.

Tapestry Group CEO Victor Luis believes that the profits of Kate Spade will eventually keep pace with Coach.

The Group expects Kate Spade to contribute $100 million to $115 million in sales for the fiscal year ending June 2019.

Under the guidance of Victor Luis, after buying Stuart Weitzman in 2015 for $574 million, Tapestry group has launched the acquisition strategy to enrich its brand matrix in recent years.

At present, the group's dominance of Coach has changed and become a comprehensive light luxury group with three independent brands including Coach, Stuart Weitzman and Kate Spade.

As for the future development, Victor Luis emphasizes that, as the meaning of the new name "Tapestry", the group will no longer be confined to the field of dress.

But the fashion group that wants to build the US version of "LVMH" is obviously more than Tapestry. Although the group has launched a takeover bid, its main rival, Michael Kors group, is stepping up.

In the short period of 2 months after the acquisition of Kate Spade, Michael Kors group also announced the acquisition of British luxury shoe brand Jimmy Choo for $1 billion 200 million.

The Group Chairman and CEO John D.Idol said in an interview that the acquisition of Jimmy Choo marks the start of the company's pformation into a global multi brand group.

Since 2017, the stock price of Jimmy Choo has increased by more than 20%, and its market value before the delisting is about 771 million. The market value of it is about 1 billion 96 million pounds, which is 2.5 times the brand's 2016 sales.

In the third quarter of December 31st, sales of Michael Kors grew by 6.5% to $1 billion 440 million, of which Jimmy Choo contributed $114 million 700 thousand.

It is noteworthy that Michael Kors group is not going to stop at Jimmy Choo, and John D Idol said in November last year at the Morgan Stanley Global Consumer and retail conference that it was actively looking for new buyers. He stressed that it would favour the acquisition of mature and potential brands, but did not disclose specific details.

A well-informed New York fashion industry once told reporters that in view of Jimmy Choo's brand positioning higher than Michael Kors, the Group intends to emulate the rival Coach mode and change the group name, but it still belongs to the preliminary discussion stage.

Up to now, Michael Kors group has not responded to the renamed message.

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However, Luca Solca, director of luxury department of BNP Exane Paribas, pointed out that the possibility of establishing the US version of "LVMH" is very small. He believes that the combined market value of the four major American luxury groups including Michael Kors and Tapestry can not match the European luxury giant, and more importantly, the reform measures of many traditional luxury brands are becoming more effective.

For example, the Italy luxury brand Prada, which was also sold before, will begin to recover after a difficult downturn.

UBS analysts said this week that the brand's retail sales density is expected to rise by 25% in 2020, a performance indicator that measures the level of revenue generated per sales space, and is expected to grow at a rate of 7.5% per year starting from Prada this year.

Thanks to this, Prada shares rose 3.89% yesterday to HK $40.1 per share, with HK $103 billion 900 million in value, a 18 month high.

Salvatore Ferragamo, which was sold in February last year, has also stepped up its restructuring in recent days, and has appointed Gucci veteran Micaela Le Divelec as its chief business officer and Strategic Manager.

Analysis shows that the experienced Micaela Le Divelec will be a reinforcements for Salvatore Ferragamoo in times of crisis.

In addition, Tod's, a shoe footwear group that has frequently been challenged by products, has successfully ignited social media in Italy fashion week this year with the new model of model and dog showing up. This has made the industry feel a pleasant surprise for a long time. "Milan"

Group CEO Diego Della Valle also announced a major decision. Tod's will implement a new plan called "Tod's Factory", inviting different designers to cooperate and no longer follow the traditional cycle of new products every six months.

Another analysis suggests that another major predicament that American luxury giants need to face may come from the impact of the economic environment.

As LVMH boss Bernard Arnault has previously predicted, the rise of protectionism has become an important threat to fashion Luxury Retailing since Trump was elected president of the United States.

In March this year, the AAFA and other 16 groups of enterprises, including Tapestry group, sent a letter to the White House, calling on the us not to impose tariffs on Chinese goods.

Some analysts pointed out that although Tapestry and other American fashion groups are ushering in a new round of performance growth, it still takes time and patience to become a real luxury magnate.

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