By Carol Ryan
LONDON, Oct 13 (Reuters Breakingviews) – Coach’s rebrand is more than just a fashion statement. The luxury handbag maker’s corporate parent has changed its name to Tapestry. Adopting a new identity can help companies distance themselves from past scandal or capitalise on investor mania for certain industries. In this case, Coach appears to be signalling a more acquisitive future to shareholders.
Coach’s announcement received a lukewarm reception on social media. The company’s New York-listed shares dropped 3 percent, knocking $320 million off its market value – though other U.S. luxury stocks such as Ralph Lauren and Michael Kors were also down slightly. Still, changing a corporate brand can be expensive and time-consuming. Gucci’s parent company was mocked in 2013 when the luxury group ditched the industrial-sounding Pinault-Printemps-Redoute in favour of Kering. Andersen Consulting more successfully changed its name to Accenture 16 years ago – spending roughly $100 million, according to media reports, in order to distance itself from its former parent, auditor Arthur Andersen, which collapsed following the Enron scandal. During the early internet boom of the late 1990s, investors bid up the value of companies that added dot.com to their names, only to sour on the moniker when tech stocks crashed.
Tapestry starts out with a trio of brands in its portfolio: Coach, shoemaker Stuart Weitzman, and bagmaker Kate Spade. It’s a long way from catching up with LVMH’s 70 brands and Kering’s approximately 20. With sector valuations high, dealmaking could prove expensive. Investors have been warned.
– Luxury handbag maker Coach on Oct. 11 announced that it is changing its corporate name to Tapestry.
– Chief Executive Victor Luis said management had been thinking about changing the company’s corporate name for a while, but made the decision following the acquisition of Kate Spade in May. The company’s stock is traded on the New York Stock Exchange under the symbol COH, which will change to TPR on Oct. 31.