Mergers and Acquisition in the Fashion Industry

Abstract

On August 10th, 2023, Tapestry Inc., the parent company of renowned fashion brand Coach, announced a definitive agreement to acquire Capri Holdings Limited, which owns the iconic brands Michael Kors, Versace, and Jimmy Choo. This move signals the company’s aspirations to establish a powerful global portfolio of ironic luxury brands, one that would rival European conglomerates LVMH, Richemont, and Kering. Merger and Acquisition is a strategic tool utilized by organizations worldwide to adapt to the demands of today’s dynamic business environment. This strategy has gained significant attention and prominence in the fashion industry. Therefore, this study employs profitability metrics, liquidity metrics, and credit metrics to assess the post-merger financial performance of a select group of fashion companies, thereby gauging the effectiveness of the M&A tool. Results of this study show that there are no significant improvements in financial performance following the merger and acquisition.