Fashion powerhouse Coach allegedly turned down by Burberry regarding takeover approaches.
Picture this, a company worth 20 billion dollars, shares of Burberry rising 4.8 percent through sole rumor alone. That’s what we would call a power couple.
It’s been reported that the famous British luxury brand Burberry, known for its signature check pattern trench coats, has allegedly declined Coach’s approach to acquire the company. At first glance, it looked like an informal measurement to “test the waters” from the modern American luxury brand, offering a “cash-and-stock” kind of takeover.
The rumour first appeared in the blog Betaville, with the Financial Times stating that Burberry soon prepared its Robey Warshaw advisers, which had to elaborate on a legal and financial position in the case of a bid.
The rumored bid unleashed a growth of 4.8 percent in the Burberry Group PIc shares, a momentary breath of release under the pressure of a slowdown in demand from Asian shoppers in the luxury market. However, such optimistic approach from investors and the stock market is not an incentive for an actual merging of brands, since the financial scenario has always been way more complex than it seems.
According to Luca Solca, a specialist in luxury goods as executive in Exane BNP Paribas, “A merger of Coach and Burberry would primarily be a merger of problems,” his opinion published in the Business of Fashion regarding the first rumors, continued: “M&A history in luxury has shown that mergers don’t obviously help in regaining brand traction and desirability, while cost efficiency in the face of declining brand momentum are often just a way to run in order to stand still.”
However, and despite the negative outcome possibility, the alleged response from Burberry might not have been a rotund negative, with their profit falling 4 percent to 182 million dollars in a insipid semester through this September. As a follow-up to this stumble, a role of ‘president’ has been created for the current creative and chief executive Christopher Bailey, to make room for Marco Gobbetti -currently in a homologous position at Céline– who will join the convoluted scenario at Burberry overtaking Bailey’s vision in the business arena.
On the other hand, across the atlantic, the skies are not so dim as those in London, Coach grows slowly but surely with 0.7 percent predictions fulfilled after reported sales of its fiscal first quarter went over 1 billion in sales; a probable sign of recovery courtesy of chief executive Victor Luis, whose correct decisions have allowed a turnaround for the former troubled status of the brand with the carriage logo.