Tony Spring

Aloha Friday 🤙🏼 Here are some interesting stories from the world of retail for Friday, May 31: 👖 Gap shares rallied more than 20% in the extended session Thursday after the retailer reported first-quarter earnings and sales well above investors’ expectations, raised its guidance for the year and pared down its inventory. 🏬 Kohl's shares plunged as much as 25% on Thursday after the retailer reported a surprise first-quarter loss and lowered its forecast for the year. The department store chain saw a 5.3% drop in net sales. 🥫 Costco Wholesale reported fiscal third-quarter profit, revenue and same-store sales that all beat Wall Street forecasts, but shares of the membership-based warehouse retailer pulled back from a record high. 💄 Ulta Beauty earnings that showed the effects of a slowdown its CEO had previously warned about. Comparable sales increased 1.6% year over year, a stark slowdown from the same period a year earlier. 👗 Nordstrom shares fell 5.6% in extended trading Thursday after the company reported a wider-than-expected first-quarter loss of $39 million, although revenue topped analysts’ estimates. 📺 Best Buy has reported the 10th straight quarter of same-store sales declines, a reported 6.1% drop for February, March and April. Its total revenue of $8.85 billion was a little lower than Wall Street anticipated. 👟 Foot Locker’s turnaround is starting to bear some fruit.  The sneaker giant saw comparable sales decline 1.8% during its fiscal first quarter, far better than the 3.1% drop-off that analysts expected. 💵 Dollar General reported better-than-expected profit, sales and same-store sales for its first-quarter as more customers shopped its stores for groceries and other essentials. 🥡 Amazon customers in the US can now order takeaway deliveries from Grubhub without leaving the tech giant’s app. The deal is part of a deepening relationship between the tech giant and Grubhub. 🚫 Illinois set to end grocery tax. Legislators have approved a state budget for 2025 that eliminates the 1% tax, paving the way for Governor JB Pritzker to sign it into law. 👓 Innovative Eyewear has released an Eddie Bauer Smart Eyewear collection. The collection includes four styles and features voice access to ChatGPT. The glasses have built-in Bluetooth microphones and speakers for music and calls. 🥖 Subway, the restaurant chain with the most locations in the US, has sold $3.35 billion of asset-backed bonds to help fund its buyout by Roark Capital Group, in what is the largest securitization of its kind on record. 📦 The Federal Aviation Administration (FAA)is giving Prime Air additional permissions that allow it to operate drones for more deliveries in a wider area. 🇫🇷 Pharmacists in France have gone on strike for the first time in a decade, closing around 90% of pharmacies across the country. #retail #retailnews #economy #DailyRetailNews

54

1 Comment

"It’s about extending our ability to find incredible brands we believe our customers will love and introducing them to those brands at a bigger scale, without the cost of a #wholesale model.” A lot to applaud in Nordstrom's #marketplace launch (#TLDR their vision is to become "The Spotify of #Fashion") ... enabling broader, deeper assortments; building out extended sizes; making marketplace items accessible to in-store #stylists; offering tailoring and alterations; and perhaps most importantly, allowing in-store #returns for marketplace purchases. In addition, I think they should use this as an opportunity to extend beyond "#gifting, #home, and #outdoor" and build share of wallet across a broader range of products and services. For some retailers, a marketplace is a chance to try and become #TheEverythingStore. For most, however, it's an opportunity to curate a range of goods and services that are tailored to your target customer(s), without the requisite costs of setting up #fullstack teams., processes, and #OTB to support. https://lnkd.in/g9aR6sjE

1

3 Comments

NOSTALGIC RETAIL SERIES: #7 - ZAYRE Brothers Max and Morris Feldberg founded a company in Boston in 1919 to supply undergarments to department stores. When sales began to decline, they ventured out to create a new discount department store. The first Zayre location opened in Hyannis in 1956. Zayre which was a transformation from the Jewish saying “Zehr fgut” which means very good, grew into one of the largest retail chains in the country with almost 1,200 locations nationwide. In the '70s, Zayre tried to buy Marshalls but failed. Their answer was to create a Marshalls clone, TJ Maxx, in 1977. Yes....TJ Maxx❗ In the mid 1980’s profits began to decline which eventually led to Zayre filing for Chapter 11 bankruptcy in 1988. The department store chain was then sold to Ames and by 1990 Zayre ceased to exist. Ames, kept the exterior similar to the style of the shuttered Zayre locations. Ames filed for bankruptcy protection in 2001 and their remaining stores were closed shortly after. Zayre’s one-time subsidiary TJX (TJMaxx, Marshalls, and HomeGoods) is thriving. Missed any in the series? Click here: https://bit.ly/3U8etfa #nostalgicretail #retail #shopping #brands #retailrealestate

38

14 Comments

Things are hotting up in the east vs west battle for global dominance of the premium department store space. Hudson's Bay Company owned Saks Fifth Avenue merging with Neiman Marcus Group further cements Richard Baker’s ambitions to create the ultimate global luxury department store conglomerate. How stable mates Hudson's Bay and GALERIA Karstadt Kaufhof GmbH will be involved in this is not yet clear but the involvement of tech behemoths Amazon and Salesforce in this move is the ultimate enabler for global consolidation in both the physical and digital space. Given the collapse of FARFETCH, the questionable future of NET-A-PORTER, and the resurrection of the department store as brand aggregator, there is a void here to be exploited for sure. Currently the Thai giant Central Group leads the field in this, linking Selfridges group, THE KADEWE GROUP, DeBijenkorf BV, Brown Thomas Arnotts , Rinascente ILLUM GLOBUS CRG and Robinsons Retail Holdings Inc. On a market by market basis there has been little cross over, other than Germany, but the digital space could see a direct battleground. Perhaps a purchase of YOOX NET-A-PORTER might be a logical place for one of them to go next? https://lnkd.in/eaxV8AXX

33

3 Comments

The new venture, called Authentic Luxury Group, will initially focus on Authentic Brands Group owned luxury and accessible luxury names including: Barneys New York, Judith Leiber Couture, Hervé Léger and Vince. Essentially, the new luxury group plans to serve as an incubator for brand growth through strategic licensing agreements and distribution channels across #fashion, #retail, #digital, #hospitality, #realestate, #art and #travel, according to the joint venture; all related to luxury lifestyle and activities. Perhaps, we are witnessing the emergence of a new luxury powerhouse from the United States, poised to join the ranks of the prestigious luxury conglomerates that dominate the fashion and lifestyle markets from France and Italy. While these European giants have long set the standard, this could signal a shift in the global landscape. Time will reveal if this American contender lead by Authentic Brands Group Jamie Salter & Saks Richard Baker can truly redefine the luxury industry on a global scale (in my personal opinion highly feasible).

20

6 Comments

Interesting read from Erica La Sala from Beauty Independent related to the Saks and Nieman merger. The question asked: What do you make of the Saks Fifth Avenue/Neiman Marcus deal? How will it impact the luxury beauty market? Will it strengthen the declining department store sector?  According to Cristina Nuñez, "... the department store channel is a challenging one. Historically, it has been the main retail channel for luxury beauty brands given it is more suited for a higher price point. But with continued declines in traffic at department stores, the channel has proven to be a difficult place for luxury brands to rely upon for growth. Instead, growth is being driven at specialty retailers such as SEPHORA and Ulta Beauty, whose dominance has largely been at the expense of department stores". "At the end of the day, consumers will continue to shop for beauty at retailers offering best-in-class in-store experiences optimized for brand discovery. Brands should seek out these partners offering the best brand building support and a path to achieving scale. Perhaps the combination of Saks and Neiman Marcus will allow for a more enhanced retail experience overall that is even better suited for luxury beauty. Time will tell." True Beauty Ventures

38

1 Comment

TJX is one of the undoubted success stories of retail. Over the past 20 years the off-price giant has grown its revenue by 246.1% or by $38.6 billion in cash terms. It has also, unlike many other US retailers, executed a highly successful international expansion program, taking its off-price model to various overseas markets. Despite being one of the giants of retail, TJX is not an old company. It was born in 1976 as part of discount retailer, Zayre Group. Since that time, it has successfully and routinely exploited the inefficiencies and mistakes of other retailers. Despite the seemingly haphazard looking shop floors, there is a lot of science and skill behind what TJX does. Buyers have extensive networks and know what their customers want. And there is a deep understanding of consumer psychology, which helps to create a sense of urgency and fun in shopping. The efficiency of the organization with its mantra of "door to floor in 24" is astonishing. I chatted with the Sunday Times about the company’s meteoric rise and the secrets of its success. Link to article in the comments. #retail #retailnews #offprice #discount #valueretail #TJX The TJX Companies, Inc.

1,055

39 Comments

🚀 Big News Alert: Saks Buys Neiman Marcus with a Boost from Amazon! 🚀 Hey everyone! Just had to share this HUGE update in the luxury retail world. Saks Fifth Avenue’s parent company is dropping $2.65 billion to scoop up Neiman Marcus, and guess what? Amazon’s in on the action, bringing their tech and logistics game. 🛍️✨ Here’s the Tea: • Power Move: Merging two luxury legends to create a mega retail powerhouse. • Tech Boost: With Amazon on board, expect next-level tech integration for a seamless shopping experience, both online and offline. • Big Bucks: Financed by top-tier investors like Rhône Capital and the Abu Dhabi Investment Council, plus $1.15 billion in debt from Apollo Global Management. • Market Shakeup: The new combo will hit around $10 billion in annual sales, giving them major leverage with suppliers and streamlining costs. Why It’s a Big Deal: This merger shows how vital tech and partnerships are in today’s retail scene. It’s proof that luxury retail is evolving and adapting, even when times are tough. For investors, this move is a clear sign of confidence in the luxury sector’s future and the potential for new opportunities. Big things are coming, and I am excited to be part of this evolving industry. Stay tuned for more updates as we keep pushing the boundaries in luxury retail!

64

4 Comments

Is the Neiman Marcus Group acquisition by Saks Fifth Avenue a Luxury Shopping game-changer? Saks Fifth Avenue's parent company, Hudson's Bay Company, is acquiring Neiman Marcus Group for an impressive $2.65 billion! This landmark deal, partially funded by Amazon, along with Rhône Capital and Insight Partners, is set to reshape luxury retail. For those who love #luxury shopping, this is a game-changer. Combining forces means expanded market reach and streamlined operations, enhancing our shopping experiences. With technological advancements redefining retail, this #merger promises exciting innovations. The inclusion of valuable U.S. real estate assets, worth approximately $7 billion, adds a significant financial boost. #Amazon's involvement is particularly intriguing. As an e-commerce leader, Amazon's participation signals a strategic move to strengthen its luxury retail presence. I’m excited to see potential collaborations combining Amazon's tech prowess with Saks and Neiman Marcus's retail expertise. HBC plans to establish Saks Global, encompassing Saks Fifth Avenue, Saks Off 5th, Neiman Marcus, and Bergdorf Goodman, with each brand operating independently. Additionally, HBC’s Canadian business will be spun off as a standalone entity, focusing on different markets. The luxury retail sector is entering a transformative phase, and I'm eager to see how this deal unfolds and impacts our shopping experiences. What do you think? Will this acquisition bring more luxury and innovation to our shopping experiences, or do you foresee challenges ahead? Share your thoughts in the comments! ⬇ #RetailNews #LuxuryRetail #BusinessAcquisition #acquisition #SaksFifthAvenue #NeimanMarcus #Innovation #CustomerExperience

11

3 Comments

According to GlobalData, the U.S. secondhand apparel market grew 11%, or seven times faster than the broader retail apparel market, to $43 billion last year. The report estimates that resale sales online and at traditional thrift stores could reach $73 billion by 2028. #resale #retail #apparel #retailsales

3

Here are some interesting stories from the world of retail for Thursday, May 30: 👖 Shares of Abercrombie & Fitch Co. continued their record run after the apparel retailer reported another quarterly earnings beat and raised its sales growth outlook, amid continued strength in the Abercrombie brand. 🏀 DICK'S Sporting Goods kicked off the year with net sales of more than $3 billion in Q1, an increase of 6.2%. Comparable sales in the quarter grew 5.3%, on top of 3.6% growth the year prior. 🦅 American Eagle said it’s making gains in boosting profitability as it works to improve its product assortment and tweak operations. Still, its fiscal first-quarter sales came in weaker than Wall Street expected. 🐹 Chewy smashed earnings estimates for its fiscal first quarter on Wednesday, announced its first share buyback program and signaled a recovering pet market. 🌳 Dollar Tree Stores announced it has acquired leases for 170 of 99 Cents Only Stores stores out of bankruptcy in Arizona, California, Nevada and Texas. Dollar Tree will reopen these stores with its own products under its brand. 🥾 Dr. Martens plc has announced a swathe of cost-cutting plans, after the bootmaker’s bottom line was hit by plummeting demand in the US last year. The London-listed firm hopes to save up to £25m in the coming financial year. 🏥 Walgreens said it will slash prices on 1,300 items across its drugstores — the latest big retailer to enact discounts as consumers grow increasingly picky about where they shop in an era of stubbornly high inflation. 🐶 Petco names a new chief stores officer as the COO exits. The pet retailer said it eliminated its chief merchandising and supply chain officer role and named five people to its executive leadership team. 👟Italian luxury sneaker brand Golden Goose, which was valued at €1.3bn when acquired by Perimia in 2020, said on Thursday it aims to list on Milan's Euronext next month. 💵 Cash register outages and internal system failures at Walmart have led to widespread mispricing, with customers being overcharged for certain items. The technical issues on March 19th affected 1,600 stores. 🌭 Americans are now prepared to spend nearly $6 for a hot dog. The summertime classic has climbed in price by 7.1% during the past year, according to the latest government figures. 🍔 A top McDonald's executive on Wednesday decried poorly sourced reports that the fast-food giant has hiked its prices faster than inflation. He also noted that an $18 Big Mac meal is exception not the rule. 💳 Visa and Mastercard have agreed to pay $197m to resolve a class action by millions of consumers accusing the financial payment companies of keeping cash access fees artificially high. 🍪 Subway’s footlong cookie is back. Following a four-month long disappearance, Subway announced Wednesday the “triumphant return” of the oversized chocolate chip cookie. #retail #retailnews #economy #DailyRetailNews

76

6 Comments

Aloha Friday! 🤙🏼 Here are some interesting stories from the world of retail for Friday, May 10: 👨🏽‍⚖️ Former retailer Bed Bath & Beyond has filed a lawsuit against Hudson Bay Capital Management, seeking to recover over $300m in trading profits from the hedge fund. 🥕 Instacart reported strong first-quarter results, as the company’s total revenue, number of orders and gross transaction volume were all up sharply year over year. On the bottom line, net income came in at $130,000. 👜 Tapestry, the parent company of Coach, Kate Spade New York and Stuart Weitzman, has expanded its outlet strategy and overall marketing spending in response to evolving consumer behaviors. 👠 Salvatore Ferragamo booked lower revenue for the first quarter, weighed by a weak consumer environment in China and the soft performance of its wholesale channel. Revenues totaled €227m in the first three months. 👓 Warby Parker’s revenue jumped 16% in the first quarter of the year as other brands in the sector struggle to grow sales. The eyewear seller expects full year sales to climb as much as 13 percent to $761 million in 2024. 👨🏻‍💻 Online retail sales in the US have increased by 7% from January to April 2024, driven by strong demand for groceries and cheaper discretionary items, according to an Adobe Analytics report. 🏋🏼‍♂️ The Planet Fitness $10-a-month membership plan is a powerful marketing tool and a central part of its strategy. But the largest gym chain in the United States is hiking that monthly fee for the first time in more than two decades. 🌈 Target has Pride merchandise in fewer stores this year after backlash it received caused it to pull some items from last year's collection. Last year collections went into all stores; this year they will go into select locations. 🍷 More Americans are making lifestyle changes, consuming fewer alcoholic beverages and switching to non-alcoholic brands that resemble booze-filled cans and bottles. 🍏 Apple has apologised for an ad for the new iPad Pro, following criticism for its depiction of an industrial compressor flattening tools for art, music and creativity. 🍓 ALDI USA plans to pass along $100m in savings to customers by reducing prices on over 250 items. The company aims to help customers save money amid concerns of persistent inflation. 🍔 Many consumers are expressing frustration at the surge in fast-food prices, which are starting to scare off budget-conscious customers: about 25% of people who make under $50,000 are cutting back on fast food due to costs. 🧸 Funko taps former Hasbro executive as CEO: Cynthia Williams served as president of Hasbro’s Wizards of the Coast and Hasbro Gaming units until she resigned last month. 🚛 DoorDash and Uber are pushing back against measures that set a minimum pay standard for delivery drivers in Seattle. NYC and Seattle are the first two cities in the US to pass a minimum wage law for food gig delivery workers. #retail #retailnews #economy #DailyRetailNews

63

1 Comment

Truly a leader in the off price sector...their buyers and management teams are best in class and able to pivot based on consumer needs....

3

1 Comment

Retail Today / Retail Renaissance: Costco’s not so secret weapon, “Kirkland Signature”, the private label powerhouse. The envy of the retail world! #costco #kirkland Yes, WalMart has their new premier line “Better Goods”, Target’s “Good & Gather”, even Trader Joe’s and Aldi are known for their private brands. #walmart #target #traderjoes #aldi But nothing comes close to “KIRKLAND”, this asset is worth $60 Billion Dollars in sales a year! 💥 See attached, it’s a “who’s who” of vendor partners. From nuts, to socks, water, wine, apparel, peanut butter, olive oil to booze. #vendorpartners #apparelindustry “Kirkland Signature” spirits, gin, vodka, bourbon, whiskey, even single malt whiskey from Scotland. Costco is the largest seller of alcoholic beverages in the U.S. at $7 Billion Dollars! Costco’s business model just keeps growing stronger, with a people-first mentality and product driven. With 876 stores worldwide, producing +$260 Billion Dollars in sales. #peoplefirst #product PEOPLE - PRODUCT - PRESENTATION - PROCESS = PROFITABILITY Sales Trend: 🔥🔥🔥 February +5% March +8% April +6% #retail #retailtrends #retailindustry #groceryindustry #wine #spirits #shoppingexperience #privatelabel #TopRetailExpert

65

21 Comments

With the big announcement of the Saks takeover of Neiman Marcus, news that activist investors have upped their bid for Macy's flew under the radar. This week, Arkhouse and Brigade Capital Management increased their offer by around $300 million. This values the stock they don’t already own at $6.9 billion. Putting more money on the table automatically makes the bid more attractive. However, it does not necessarily make it right for the long-term health of Macy’s. Arkhouse and Brigade are focused on real estate. They want to monetize Macy’s property to generate a return. This essentially means selling off stores and then charging Macy’s rent on the shops it continues to operate. We have seen this story play out many times before, and it rarely ends happily for retailers or brands. Take Red Lobster as the latest example. After being bought by private equity, a sale of real estate generated $1.5 billion; but it ended up costing the chain $200 million a year in rent – effectively pushing it into bankruptcy. The tragedy of all this is that it comes just as Macy’s, for the first time in a long time, has recognized the problems in its retail operation and is working to remedy them. CEO Tony Spring has set out a plan for renewal and is executing with speed. There is still a lot to do, but in my view that strategy should be given the time and chance to succeed. At the end of the day, Macy’s can be run as a retailer and built up. Or it can be used as an ATM to generate some short-term cash and torn down. Only one of these paths leads Macy’s into the future.  #retail #retailnews #departmentstores #corporatedeals #realestate

493

78 Comments

The response to Pura Vida Miami's opening in Manhattan validates the rise of the ‘all day café’ as one of the fastest growing trends in consumer retail over the past three years. The strong majority of new growth stage F&B brands that sit within this category show a shift away from the assembly-style quick service restaurant model, now with a large focus on the ‘made-to-order’ service model. This is absolutely where we at Brand Urban are seeing the most consumer demand, as well as the most landlord excitement (from a pure amenity-perspective in both residential and commercial assets). But what constitutes an ‘all day café’? We are seeing concepts of all shapes and sizes: some concepts with limited-service models and others with full-service programs. Some concepts have retail, gifting and gourmet market components, others have great daytime coffee and pastry programs, and some have heavy lunch, happy hour, through dinner business. The key is prioritizing affordability and approachability - while increasing the average check through a touch of hospitality and ambiance. As a New Yorker, some of local OG’s in this category are Westville Restaurant Group, The Grey Dog and Jack’s Wife Freda – all of whom are continuing to show thoughtful growth with a combination of full-service and limited-service offerings. I continue to be amazed by the influx of best-in-class, growth stage brands from Maman NYC, Ruby's Cafe, Tatte Bakery & Cafe and Daily Provisions (to name a few). As I watch the urban and suburban growth on the horizon for these brands, coupled with growing consumer excitement, it is clear that this category is the future of casual dining. #alldaycafeculture #casualdining #consumerretail #trends #hospitality #limitedservicedining #realestate #brandurbanre

216

11 Comments

NOSTALGIC RETAIL SERIES: 15 - LINENS 'N THINGS "In November 1958, Eugene Wallace Kalkin established a leased-linen department in the New Jersey discount retailer Great Eastern Mills. In August 1970, Great Eastern Mills opened the first Linens 'n Things store in East Brunswick, New Jersey. After a succession of corporate ownership changes and the bankruptcy of Daylin, Inc. in 1975, Kalkin bought seven locations out of bankruptcy and founded an independent parent company, which became Linens 'n Things, Inc.." *[Home Textiles Today]* In 1983, Melville Corporation acquired the 55 unit chain. By 2006, the chain boasted 571 stores in the U.S. and Canada. The company's business strategy was "to offer a broad selection of high quality, brand name home furnishings merchandise at exceptional everyday values, provide superior guest service, and maintain low operating costs."*[The Wayback Machine]* But with a ton of debt from private equity buyouts (I know we have never heard this story before), all Linens 'n Things stores were closed in late 2008. As with many of the retailers in this series, the brand went online only with a relaunch in early 2009 and then shut down their online-only presence in 2018. The rights to the brand were acquired by Retail Ecommerce Ventures in 2020 and the website was relaunched. As of today, it is active with brands of yesteryear showing on the top banner that live on in an online only fashion. Missed any posts in the series? Click here for the website with the full list: https://bit.ly/3YxvVfR #nostalgicretail hashtag#retail hashtag#shopping hashtag#brands hashtag#retailrealestate Photo: By Ildar Sagdejev (Specious) - Own work, CC BY-SA 4.0, https://bit.ly/40tAiK6

35

4 Comments

Here are some interesting stories from the world of retail for Thursday, September 5: 🏬 The family behind Nordstrom, one of the country’s oldest department stores, is offering to take it private for $3.8 billion. The retailer has formed a special committee of directors to evaluate the deal. 🌳 Shares of Dollar Tree Stores fell more than 22% on Wednesday after the discounter cut its full-year outlook, citing increasing pressures on middle-income and higher-income customers. 🏀 DICK'S Sporting Goods beat Wall Street’s expectations on the top and bottom lines. Net sales rose 7.8% to $3.5 billion. Comps in the quarter were up 4.5%, while net income increased 48% to $362 million. 📦 The Container Store is turning to a reverse-stock split after investors and shoppers soured on the retailer. The company is doing a 15-for-1 split after it received a noncompliance notification from the NYSE. 🥐 The chief executive of Kroger insisted Wednesday that merging with Albertsons would allow the two supermarket companies to lower prices and more effectively compete with retail giants like Walmart and Amazon. 👙 Marks and Spencer is shifting its focus to attract younger shoppers, particularly Gen Z, by revamping its lingerie line. The retailer has introduced bolder designs. 💵 While dollar stores once expanded to reach a growing number of financially strapped Americans, they underestimated just how financially strapped many Americans would become. ⌚️ Watch company Fossil Group, Inc., struggling with falling sales, has found its next leader — a veteran of the sportswear and outdoor gear industry who most recently headed up Salomon. 🎃 Chipotle Mexican Grill has announced a costume collection with Spirit Halloween. The collection is made up of bodysuits that are meant to resemble a Chipotle napkin, fork, water cup, burrito and to-go bag. 👶🏼 Shein and Temu, the two big Chinese low-cost e-commerce websites, are the target of a proposed investigation by the United States government for selling deadly baby and toddler products. 🥩 Beyond Meat plans to launch a whole-muscle steak alternative that mimics the taste and texture of a filet. Beyond is hoping to win over consumers who thought its products were too processed by trimming its ingredient lists. 🥤 Less than a year after McDonald's McFlurry desserts lost their iconic spindles, the fast-food giant announced that the item is "getting a makeover" as it tries to reverse a current sales decline. 📉 Nine out of 12 Federal Reserve Board regional districts reported flat or declining economic activity in August, according to the central bank’s so-called Beige Book report. #retail #retailnews #economy #DailyRetailNews

63

5 Comments

As Tapestry unravels, Is Michael Kors left holding the bag? In a twist that turned heads across the fashion world, a judge has blocked Coach owner Tapestry from buying Capri Holdings Limited, citing the #FTC’s competition concerns. Capri’s marquee brand, Michael Kors, has only deteriorated since the merger was announced—leading many to question the viability of Capri’s future. The market’s reaction was swift and brutal: Capri’s stock, already slumping, took a nosedive, while Tapestry’s shares jumped—a clear “phew” from investors who had qualms about Tapestry inheriting Capri’s challenged portfolio. Here’s why it’s a challenging situation for Capri: Since Michael Kors hit peak revenue in 2016, sales have been sliding, with margins crushed under the weight of excessive discounts. Capri’s operating margins, which once sat at a robust 30%, have now plummeted to below 10%. To top it off, since the deal was announced, Capri’s numbers have gone from bad to worse, with Michael Kors logging its seventh consecutive year-on-year sales decline. Even the higher-end Jimmy Choo and Versace lines have posted declines recently. In contrast, Coach—which faced similar challenges a few years back—has since pulled off a notable turnaround; Kudos to Todd Kahn. The hope was that Tapestry’s team could apply that same playbook to save Michael Kors. But now, with the deal stalled, Capri has to chart its own path or hunt for another buyer. Capri’s options aren’t enviable. The trial testimony cast a harsh light on its current strategy, and investors now demand a credible turnaround plan—and possibly some leadership changes. With shares sinking, the chances of an attractive takeover offer look slim. Ultimately, that discounted Michael Kors bag Capri hoped to pass along is now firmly—and perhaps permanently—in its own hands. "My life has been a tapestry Of rich and royal hue An everlasting vision Of the ever-changing view A wond'rous woven magic In bits of blue and gold A tapestry to feel and see Impossible to hold" "He moved with some uncertainty As if he didn't know Just what he was there for Or where he ought to go Once he reached for something Golden hanging from a tree And his hand came down empty" - “Tapestry” by Carole King - A message for Michael Kors? A message for the #fashion #brand #retail industry.

36

5 Comments