近年奢侈品业最大并购案，幕后推手是她

Coach’s New York Fashion Week event, which commandeered the main branch of the New York Public Library for a glamorous night in September, was clearly a hot ticket. But one VIP was conspicuously absent: Joanne Crevoiserat, the CEO of Coach’s parent company, the fashion conglomerate Tapestry.

It’s not that Crevoiserat wasn’t interested in the splashiest show by the biggest brand in her company’s portfolio. (Coach accounted for about $5 billion of Tapestry’s $6.7 billion in revenue last year.) But in an industry known for flamboyant, publicity-seeking leaders, Crevoiserat has always eschewed the limelight, preferring a low-key, get-it-done management style.

The CEO says she preferred to have her ticket go to a creator in the Coach ranks. “It isn’t my thing, and I want to support our creative teams,” Crevoiserat tells Fortune during an interview at her office in New York’s Hudson Yards. “There’s a lot of work that goes into the runway shows, and creativity is the engine that drives the brands.” She and her adult daughter caught a tennis match instead, from nosebleed seats at the U.S. Open in Queens.

Crevoiserat, a retail and apparel industry lifer, is hardly a self-effacing wallflower. Rather, she sees the role of a CEO as that of a behind-the-scenes player who provides direction and cohesion and comes up with the strategy around which the company will coalesce. That’s an especially important role at a portfolio company like Tapestry that is steering multiple brands. She admits she has often had to be persuaded by Tapestry’s communications team to do sit-down interviews like ours.

To be sure, publicity has been a double-edged sword for Tapestry’s leaders of late. The company formerly known as Coach renamed itself in 2017 after Coach bought the accessories maker Kate Spade, its biggest-ever acquisition at that point, and announced plans to become a portfolio company. (Tapestry also owns the shoe brand Stuart Weitzman.) Problems with integrating Kate Spade cost one Tapestry CEO his job in 2019; less than a year later, the board pushed out the next CEO amid a controversy over his personal behavior.

Crevoiserat, who became CEO in October 2020 after three months as interim chief, inherited a company in turmoil after those very public ousters: Overlaid on the CEO turnover was the pandemic, which hurt luxury spending and isolated workers from each other. Since then, she’s been a stable, patient presence, and a leader whose primary mission has been instilling a more cohesive culture at Tapestry–one that combines some of the advantages of scale, like operating efficiencies and a wider range of career opportunities, with a respect for individual brands’ personalities and ways of operating. Like just about every other retail CEO of her generation, she’s also been overhauling Tapestry’s tech infrastructure–successfully, most analysts agree.

Crevoiserat will need every skill in her toolkit to help her successfully pull off Tapestry’s recently announced $8.5 billion purchase of its arch-rival, Capri Holdings. Capri is home to Michael Kors, Versace and Jimmy Choo—all names that rival Coach and Kate Spade in the luxury category. The deal will double Tapestry by annual revenue to about $12 billion and make it a true portfolio company with six separate brands. (It’s the largest U.S. retail M&A deal since department store operator Federated bought rival May Department Stores in 2005.)

Tapestry announced the Capri deal in August, making the case that the two companies, despite some similarities among their brands, are complementary. But Wall Street isn’t buying it: Many analysts see the deal as risky, and Tapestry’s shares are down 30% since the announcement.

Part of the skepticism stems from what one might call turnaround fatigue. Tapestry spent the second half of the 2010s rehabilitating Coach after a few very painful years during which the brand became overextended and cheapened; it then pulled off a similar fixer-upper job for Kate Spade that dragged on. Now investors worry that Tapestry could again be facing a long slog in continuing Capri’s overhaul of Michael Kors—which, like Coach, is by far the biggest brand in its parent’s stable. Michael Kors is famed for the jet-set, blingy aura that made its ready-to-wear lines big business, but its cachet has been severely damaged by years of overexposure, the kind of market saturation that leads to too much presence at discount stores and outlet malls.

In a research note, Wells Fargo analyst Ike Boruchow pointed to the ample M&A failures in retail, and said of the Capri deal that Michael Kors’s shaky status “adds real execution risk.” Paul Lejuez at Citi was more blunt: “TPR has not had a great track record of making and integrating acquisitions,” he wrote in a research note, though he did acknowledge Crevoiserat and her team had had more success than previous c-suites had, and that Tapestry was paying a reasonable price for Capri.

In addition, the deal will also dramatically increase Tapestry’s complexity. “It’s a lot to digest,” says Neil Saunders, a managing director at GlobalData. “Tapestry is buying a company that is in need of a lot of work and that it basically has to turn around.” That makes it a formidable test for Crevoiserat—an executive who has already shown that she can project calm amid the industry’s storms.

Cool in times of crisis

For much of her life, becoming a CEO in the fashion world was nowhere on Crevoiserat’s radar screen. The Connecticut native, who grew up in Groton, not far from the Rhode Island border on Long Island Sound, is an accountant by training. She was tempted by law school when she finished college in 1985, but daunted by the cost, she decided to go work in retail, thinking it would be a brief interlude after which she’d get her MBA and “get a real job.” But her just-out-of-school gig at May Department Stores led her to undergo that company’s management trainee program; later, she worked at Walmart and Kohl’s.

Those experiences exposed Crevoiserat to many facets of retailing, from anti-theft measures to planning and allocation. Combined with her accounting training, it foretold her future as CFO at Abercrombie & Fitch, where she worked from 2014 to 2019 before joining Tapestry as CFO.

In hindsight, Crevoiserat says, her path to CFO roles was unconventional. Typically, someone eyeing a finance chief role will start with a stint as an accountant at a “Big Four” firm like PwC, or at the Securities and Exchange Commission. Still, Crevoiserat allows that even in other roles she has kept the discipline and focus on cost-control typical of finance chiefs. “You can take the girl out of the CFO role but you can’t take the CFO out of the girl,” she jokes.

Her versatility in roles other than CFO may be the key to her success as CEO. Crucially, she was the top lieutenant to Abercrombie CEO Fran Horowitz in co-designing and executing the company’s long but ultimately wildly successful turnaround–during which Crevoiserat also held the role of chief operating officer. Abercrombie in the early 2010s had seen sales plummet and, in Mike Jeffries, had a CEO who had created a toxic culture at the retailer prior to his ouster in 2014. One of Crevoiserat’s earliest moves as CFO was to get rid of Abercrombie’s private jet, which had become a symbol of excess: On top of being expensive, it made headlines when media reports said that Jeffries had implemented imperious rules such as demanding that the jet’s flight attendants be young, buffed, and shirtless.

Abercrombie’s CEO office sat unoccupied for more than two years, with an “Office of the Chairman” that included Horowitz and Crevoiserat to do the job while the board’s search committee looked for someone to save the deeply damaged corporation. Yet Crevoiserat says didn’t feel she was the right person for the CEO position at the time, since she believed CEOs by definition had big personalities. She recalls being asked by Abercrombie’s then-chairman Arthur Martinez, a former Sears CEO, why she hadn’t tossed her hat in the ring. “I said, ‘I’m not sure I’m the CEO type,” she recalls. After Martinez told her that there was no single “CEO type,” she still didn’t apply.

But in the back of her mind, she says, she started to rethink her view that CEOs had to be larger than life, or at least very much out there. By the time the Tapestry board tapped her to be interim CEO in 2020, she felt more than ready for the role.

Her arrival came at a time of crisis. CEO Jide Zeitlin had replaced Victor Luis less than a year earlier; Luis lost his job in part because of how big a drag on the company the Kate Spade acquisition was turning out to be. Zeitlin, who had been a Coach director since 2006, was then ousted because of allegations of past inappropriate behavior; in particular, one woman accused him of posing as a photographer under an alias in 2007 to lure her into a romantic relationship. That left Crevoiserat, a rookie CEO, to deal with a troika of problems: reassuring a workforce rattled by the management turnover; navigating a pandemic during which consumers did not need Tapestry’s handbags and shoes; and bringing the Kate Spade brand back to health.

Crevoiserat now recognizes that Tapestry made strategic mistakes with Kate Spade after buying it in 2017. Tapestry pushed the brand to trade its relatively joyful ethos, anchored in novelty and crazy colors, for a more muted, sophisticated color palette—a move that effaced what made Kate Spade stand out among countless handbag brands. “At Kate, we walked away from some of that core DNA and we effectively fired our customer,” she says.

Under Crevoiserat’s leadership, Tapestry has gone back to letting Kate be Kate. The business bounced back strongly from the pandemic (although sales fell 2% last year, in a reminder of how exposed to consumer pullbacks “aspirational” luxury brands like Kate Spade can be). That approach represents Crevoiserat’s broader support of autonomy among Tapestry’s brands: The chief exec and her fellow c-suite officers keep apprised of what the creative teams are up to, but won’t intervene unless they see something wildly off brand. “While I don't weigh in on the creativity, I'm there for those teams,” Crevoiserat says, “and I want to make sure that we're allowing them to drive the creative process in a way that helps move the brands forward.”

Crevoiserat says that just before the one-two punch of the pandemic and the CEO crisis, Tapestry was about to launch a transformation program that she and Zeitlin were to lead. COVID shut down a huge chunk of its store fleet for weeks, which in turn fueled the need for that transformation: The pandemic underscored how necessary modernizing its tech and e-commerce was, along with the importance of adopting a less top-down culture to foster agility on the front lines. And her time co-piloting the Abercrombie turnaround would prove to be very handy to her: “Frankly, it could create a case for change in the organization that was compelling,” the CEO says of the perfect storm of crises at Tapestry.

A chance to do luxury at scale

For all of Crevoiserat’s low-key style, she will soon be the author of one of biggest luxury sector deals ever in the U.S. Capri, with 2022 revenue of $5.7 billion, is almost as large as Tapestry. Many on Wall Street were stunned by the deal, not least by the $8 billion in bridge-financing debt Tapestry will take on to finalize it.

There is also some PTSD in the investor community after Tapestry’s years-long Kate Spade struggles—and related questions about whether Tapestry will be able to fix Michael Kors, which generates 69% of revenue at Capri, as fast and effectively as investors would like given the debt burden. The $3.88 billion the Kors brand pulled in in 2022 is still well below its $4.5 billion high water mark in 2016. And it isn’t helping that business is slowing in North America for both Tapestry and Capri.

Still, Crevoiserat professes to be baffled by Wall Street’s reaction to the deal. “This acquisition was so completely obvious that it surprised me how many people were surprised,” she says.

She posits that the companies are complimentary. Capri, for example, is better established in Europe. In Versace and Jimmy Choo, it has a bigger presence in the world of high luxury than Tapestry’s brands; and in Kors it has a jet set brand popular with shoppers younger and more diverse than Coach’s. In return, Tapestry’s Asia business is much bigger, and it is a powerhouse in leather goods, notably handbags.

Tapestry also has a tech backbone that Capri lacks. It has invested in an infrastructure of systems, which the company calls "Toro," that helps all its brands manage inventory better. Toro also fuels better marketing and guides new product development, by generating deep insights into consumers’ behavior. Toro, in turn, serves a long-standing effort by Tapestry to become much less dependent on department stores with all their problems, and to sell a greater percentage of its products via its own stores and websites. E-commerce is now a $2 billion business for Tapestry, accounting for almost a third of revenues. Crevoiserat says the company has also created a more efficient cost structure at Tapestry that she says will save the combined company $200 million a year when the deal closes.

Another big rationale for the deal is that, well, everyone else is consolidating. As evidenced by the growth in the last twenty years of European luxury giants LVMH, Kering, and Richemont, upscale brands often thrive as part of a larger company with bigger resources, and clout with suppliers, than as stand-alone companies.

For all its problems, Kate Spade illustrates the potential of that idea. After the Tapestry acquisition, the brand was able to get better prices for leather than it was on its own. “When you are buying for several brands, you get better negotiating power and that’s another big advantage that these luxury conglomerates can have,” says Columbia Business School professor Silvia Bellezza, who once worked at LVMH in marketing. As Coach brand CEO Todd Kahn puts it: “We want to have the power of a $12 billion enterprise when we’re procuring everything from toilet paper for our stores to negotiating leather supplies.” (Tapestry execs insist that the idea of the deal is not to create a North American counterpart to LVMH. LVMH’s portfolio, for one thing, is an order of magnitude bigger, with about 75 brands in fashion, jewelry, beauty products and alcohol, and $90 billion in revenue.)

Tapestry’s management is also committed to avoiding any growth-at-all-costs mindset. Overextension hurt Coach in the 2010s: There were too many models of handbags, too many “C” Coach logos slapped on its products at a time of a backlash against logos among consumers, and too much reliance on outlet stores. Coach closed 25% of its stores in one fell swoop in 2014, dialed back its discount outlet business, and eventually ended up removing half the products in its cluttered assortment.

Over the same span, Coach hired Stuart Vevers, the lauded designer who has since then turned Coach into a fashion house known for shearling coats and leather pants as well as accessories, and enough of a serious fashion force to attract the likes of Jenny from the Block to Coach’s shows. “We stopped undervaluing our product and we started to create more fashion credibility,” says Kahn, a longtime Coach and Tapestry veteran.

Tapestry later had to do similar work on Kate Spade. Now it faces similar challenges at MIchael Kors, which is present at high-retailers like Neiman Marcus and Nordstrom, but also at T.J. Maxx and countless other outlet stores.

Tapestry executives dismiss the criticism from some analysts that Michael Kors will turn out to be a troublesome acquisition. Tapestry’s finance chief, Scott Roe, says that the due diligence he and Crevoiserat conducted included in-depth assessments of each Capri brand’s reputation with consumers. “We wanted to make sure we weren’t buying brands that had health issues we thought were significant,” says Roe. Brand equity was one of two red lines for Tapestry in looking at the potential acquisition; the other was whether it would jeopardize Tapestry’s investment grade debt rating. “There’s a lot of debt. Let’s acknowledge the reality about this transaction. But it’s also a lot of cash flow,” says Roe, who came to be CFO from VF, the brand portfolio company that owns The North Face and Vans, among others.

Whatever misgivings Wall Street has about the deal and the financing, investors do have faith in Tapestry’s c-suite. Telsey Advisory Group wrote in a note that “we view TPR management as well suited for the strategic and financial work ahead.”

Crevoiserat’s fine-tuned sense of corporate culture will be one key to making this mega-deal work. The CEO will have to find the balance of fostering an atmosphere that unifies the company and its employees, while allowing the brands—all stand-alone companies not long ago, with their own ethoses and ways of doing things—to keep their internal identities. “The cultural side is going to be very important because I think the key to a lot of this is actually integrating all these brands,” says GlobalData’s Saunders.

A big part of that integration, for Crevoiserat, means cultivating talent with a promise of wider opportunity: At a portfolio company like Tapestry, people can have a thriving career that can move across different brands. She emphasizes having an inclusive and diverse workforce, as well. And Tapestry is very focused on sustainability—another priority that benefits from scale, given that many functions that affect the company’s carbon footprint, like procurement and lease negotiation, will be shared across brands.

'We're building here'

The name Tapestry itself was not beloved at first by executives or Wall Street when it was introduced six years ago to replace Coach. But Crevoiserat has come to think it applies well both to the company and to her own role. Her job, she says, “is about weaving together beautiful things and making a more beautiful story, and that’s what a tapestry is.”

Perhaps that’s why Crevoiserat doesn’t see herself as a dealmaker, despite being the CEO who pushed for the largest U.S. fashion deal in decades. “It’s the right thing for our business,” she says. “When I hear the term ‘dealmaker,’ I think, ‘Your job is to buy this one, sell that one.’ We’re building here, and I’d rather be a brand-builder and a talent-builder than a dealmaker.”