NEW YORK - Tapestry, Inc. (NYSE: NYSE:TPR), the parent company of Coach , Kate Spade, and Stuart Weitzman, is standing firm against the Federal Trade Commission's (FTC) efforts to block its proposed acquisition of Capri Holdings Limited (NYSE: NYSE:CPRI), which includes luxury brands such as Versace, Jimmy Choo, and Michael Kors.
Tapestry contends that the FTC's attempt to halt the merger is based on a misunderstanding of the competitive nature of the luxury fashion market. According to the company, the industry is highly fragmented, with consumers enjoying a wide array of choices across a broad pricing spectrum, a fact the FTC has overlooked.
The deal, which Tapestry believes is pro-competitive and beneficial to consumers, aims to bring together six high-profile brands under one umbrella. This would enable Tapestry to reach a more diverse global luxury consumer base and drive growth for Capri's brands. The company asserts that the combined entity would continue to innovate and offer competitive wages and benefits.
Tapestry has expressed confidence in the legal validity of the acquisition and its positive effects on customers, employees, partners, and shareholders internationally. The company plans to defend the transaction in court and aims to finalize the merger within the 2024 calendar year.
The FTC remains the last regulatory body to approve the transaction, with Tapestry awaiting the chance to present its case.
This news is based on a press release statement from Tapestry, Inc.
InvestingPro Insights
In light of Tapestry, Inc.'s ongoing battle with the FTC over its proposed acquisition of Capri Holdings Limited, investors may be keen to understand the financial health and market position of the company.
According to InvestingPro data, Tapestry boasts a robust gross profit margin of 72.28% over the last twelve months as of Q2 2024, underlining the company's strong operational efficiency. This is mirrored by an impressive operating income margin of 18.56%, reflecting the company's ability to convert revenue into actual profit effectively.
Investors may also find comfort in Tapestry's commitment to shareholder returns, as evidenced by its consistent dividend payments over the past 16 years, with a notable dividend growth of 16.67% in the last twelve months as of Q2 2024. Additionally, the company's stock price has experienced a large uptick of 47.12% over the last six months, suggesting increasing investor confidence.
For those considering a deeper dive into Tapestry's stock performance and financial metrics, two InvestingPro Tips provide further insights: Tapestry has raised its dividend for three consecutive years and the company's stock is currently trading at a low P/E ratio of 10.13 relative to near-term earnings growth, indicating potential undervaluation. Investors seeking additional tips can explore more on InvestingPro, which offers 11 more tips for Tapestry, Inc. at https://www.investing.com/pro/TPR.
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