Kraft became Mondelez, Google renamed itself Alphabet, Philip Morris was reborn as Altria and now Coach is Tapestry. Changing a company’s name is a really big deal, one fraught with peril of confusing customers by losing valuable brand awareness.
Reporting in Fortune, Caroline Fairchild wrote:
As corporations evolve their strategy, their brands can change too — for better or for worse. And if history is any indication, an identity change followed by a title switch can cause a company more trouble than it’s worth. Corporations spanning industries as diverse as technology to defense have all rebranded themselves only to the peril of their businesses. While some have successfully navigated the dangers of a new title, these instances prove to be the exception rather than the rule.
Sometimes, as Fairchild notes, those name changes are driven by a strategic shift in direction, per Kraft to Mondelez. Other times it’s propelled by management’s desire to change the perception of the company, as with the Google-Alphabet change. And in other instances, it’s an effort at obfuscation to hide part sins, such as Philip Morris’ change to Altria, which remains a wolf in sheep’s clothing. For Coach’s rebirth as Tapestry, it is probably a little bit of all three.
Explaining the change, Victor Luis, Tapestry’s CEO, told the New York Times, the new name is “A wonderful metaphor for what we believe in, which is individual threads of different colors all working together to create a picture.”
Following the acquisition of two new companies sporting powerful brand names, Stuart Weitzman in 2015 and more recently Kate Spade & Company, the Coach name no longer fit the bill. A new name was required for the luxury brand conglomerate it plans to become, following the European luxury model established by LVMH Moët Hennessy Louis Vuitton, Kering (Gucci, Saint Laurent, et.al.) and Richemont (Cartier, Van Cleef & Arpels, et. al.). And following the euro-model, each Tapestry brand name will remain in place and be the point of contact for each brand’s customer base.
“Luis’ logic is correct for building a portfolio of brands,” says Robin Lewis, founder of The Robin Report. “It would indicate he will continue to pursue other acquisitions.” While this is a new corporate model for luxury brands in America, Lewis notes, it’s a model that has been successful for VF Corporation.
And it is one that Tapestry’s closest competitor, Michael Kors is said to be following, which acquired Jimmy Choo about the same time Coach closed on Kate Spade. John Idol, Kors CEO, is quoted in the above New York Times article, that it is at “the beginning of a strategy that we have for building a luxury group that really is focused on international fashion brands.”
Both American aspirational luxury conglomerates, Tapestry and Michael Kors, have also signaled that their acquisition targets are not limited to U.S. brands, but will extend across the globe. “Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies,” the Tapestry announcement read.
Lewis believes that this path toward forming multi-branded conglomerates is the only possible way for public companies in the retail/fashion sector to grow in the current market. “Infinite growth for a mono-brand is impossible,” he says. “And this is an indication that Luis’ realizes that.”
Creative consultant to luxury brands, Diane Lemonides, founder of Verve Marketing and Design, likes the image of a woven tapestry of brands that the new name alludes to. Yet she is unsure that this strategy will be a life line for the company’s collective future. “Coach has been dead for a while. Tapestry? Yes, stitched together brands that may all just go down together,” she says.
Coach’s social media followers and investors seemed to share Lemonides’ reserve. Stock analyst for 24/7 Wall St. Trey Thoelcke reported that on social media the Coach-Tapestry news was met with “many questioning or even mocking the decision to change identities after 76 years.” Investors, too, were less than enthusiastic about the change, with the stock price declining nearly 3% on the day the news broke.
I too am skeptical that the world needs any more luxury brand conglomerates. At the same time, I share Lewis’ view that a mono-brand corporate structure is challenged in today’s market demanding quarter-on-quarter results. Further, I believe those demands have done more harm than good for aspiring American luxury brands, including Coach, Kors, Tiffany and Ralph Lauren.
The key for success for Luis’ Tapestry vision will be whether it can inspire luxury aspirations in the next generation of consumers, both here and abroad. In this move, however, Tapestry may face more blood-thirsty competition than imagined, as it goes up against LVMH, Kering and Richemont. Good “Luxe” to Luis and his Tapestry team.