Capri Earnings: Tapestry Remains a Willing Buyer Despite Deteriorating Results; Shares Attractive

No-moat Capri posted poor results in its (March-ended) fiscal 2024 fourth quarter as Michael Kors' sales dropped 10%. Capri's results have weakened since its acquisition by narrow-moat Tapestry was announced last August, but we still believe that Tapestry's management sees high potential for Capri's brands and wants to close the deal. Our base-case scenario remains that Tapestry and Capri will oppose the US Federal Trade Commission's block in court, ultimately prevail, and complete the acquisition at the agreed-upon price of $57 per share. However, we acknowledge there is some uncertainty, because the FTC can make a case that the deal reduces competition in a slice of the US handbag market.