MW Tapestry is selling Stuart Weitzman to focus on Coach, Kate Spade after Capri deal falls through

By Ciara Linnane

In November, a judge backed the FTC's effort to block a merger of Tapestry and Michael Kors parent Capri

Tapestry Inc.'s stock fell 1.1% Wednesday after the company announced it is selling its Stuart Weitzman footwear brand to Caleres Inc. for $105 million in cash.

Tapestry (TPR) will retain its two other brands - Coach and Kate Spade, both known for handbags, accessories and clothing. Caleres $(CAL)$ is home to a portfolio of footwear brands, including Famous Footwear, Sam Edelman, Allen Edmonds, Naturalizer and Vionic.

"Importantly, as diligent stewards of our portfolio and disciplined allocators of capital, this transaction ensures that all our brands are positioned for long-term success and that we maintain a sharp focus on our largest value creation opportunities," Tapestry Chief Executive Joanne Crevoiserat said in prepared remarks.

The news comes just months after a federal judge blocked Tapestry's planned $8.5 billion acquisition of Michael Kors parent Capri Holdings Ltd. $(CPRI.UK)$, agreeing with regulators that the deal would hurt competition in the handbag industry.

Capri is also the parent of the Versace and Jimmy Choo brands.

The Federal Trade Commission had sued to block the deal in April. In November, U.S. District Judge Jennifer Rochon said the merger would result in "loss of head-to-head competition" and found "persuasive additional evidence of unilateral effects of the merger causing anticompetitive harm."

Tapestry said at the time that it was disappointed by the ruling and planned to appeal. But the stock has fared well over the last 12 months, gaining 91% to outperform the S&P 500's SPX 22% gain.

Analysts overall agreed Tapestry was well positioned to go it alone, while Capri remains pressured by soft demand for Michael Kors bags.

Jefferies said Tuesday that Tapestry's stock is a top pick for 2025 and cited some strong performance metrics, including a 12.6% increase in January web traffic to Coach.

"We expect continued momentum at Coach given innovation focus (e.g. Brooklyn, Tabby, bag charms) and AUR runway," analysts led by Randal J. Konik wrote.

AUR stands for average unit retail, or the average selling price for an item over a specific time frame. Coach's Brooklyn is a large shoulder bag, while Tabby is a smaller, slimmer shoulder bag, and charms are accessories used to decorate bags.

Coach's web traffic leads peers Michael Kors, Versace, Ralph Lauren Corp. $(RL)$ and Tory Burch, said Jefferies.

The FTC, under former head Lina Khan, had taken an aggressive stance on a number of deals, including Kroger Co.'s $(KR)$ attempt to merge with rival grocery chain Albertsons Cos. $(ACI)$.

That move by the FTC, which had the support of nine attorneys general - from Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia - came on the back of concerns the merger would stifle competition, raise already high grocery prices and harm workers and product quality.

-Ciara Linnane

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February 19, 2025 11:24 ET (16:24 GMT)

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