New York Trend Week isn’t the one main vogue occasion occurring this month. On Monday, vogue icon Michael Kors testified in an antitrust trial in Manhattan as a Federal Commerce Fee lawsuit filed in April that seeks to dam Tapestry’s $8.5 billion acquisition of Capri Holdings.
The deal, if accredited, would place six main vogue manufacturers beneath one firm: Tapestry’s Coach, Kate Spade, and Stuart Weitzman; and Capri’s Versace, Jimmy Choo, and Michael Kors. The FTC argues this deal would “get rid of direct head-to-head competitors between Tapestry’s and Capri’s manufacturers” and provides Tapestry a “dominant share” of the accessible luxurious purse market—or luggage produced from high quality chief and craftsmanship provided at a extra inexpensive value.
“With the purpose to develop into a serial acquirer, Tapestry seeks to accumulate Capri to additional entrench its stronghold within the vogue trade,” Henry Liu, director of the FTC’s Bureau of Competitors, mentioned in an announcement. “This deal threatens to deprive customers of the competitors for inexpensive purses, whereas hourly employees stand to lose the advantages of upper wages and extra favorable office circumstances.” The FTC declined to remark additional on the matter when requested by Fortune, and Tapestry didn’t reply to a request for remark.
In different phrases, the FTC thinks if the acquisition is profitable, it might create a large firm with the ability to unfairly elevate costs for customers.
Kors, who based his namesake model at age 22 in 1981, argued in his testimony that his model doesn’t have all of it that nice proper now. Michael Kors’ first quarter income dropped greater than 14% year-over-year, in line with Capri’s first quarter fiscal 2025 outcomes posted Aug. 8. Capri didn’t reply to Fortune’s request for remark concerning the FTC go well with.
“Generally you’ll be the most popular factor on the block,” Kors mentioned in his testimony. “Generally you’ll be lukewarm. Generally you’ll be chilly.” Kors nonetheless serves as the corporate’s chief inventive director.
Kors blamed a few of the dwindling enterprise to the character of social-media advertising and marketing and promoting. He used Taylor Swift’s affect for instance. Kors, who’s been within the vogue trade for many years, had by no means heard of purse designer Aupen till he noticed a photograph of Swift carrying it. After seeing Swift carrying the bag, Kors tried to go to the designer’s web site, however it had crashed.
“It reveals you the ability of girls like this,” Kors mentioned in his testimony. Kors even admitted his model wants a refresh because it’s “reached some extent of brand name fatigue.”
Legacy manufacturers battle in an influencer period
Model advertising and marketing specialists say Kors has some extent.
“Legacy manufacturers usually battle within the influencer period as a result of their conventional strategies of constructing model status by means of exclusivity and heritage can conflict with social media’s fast-paced, democratized world,” Contrecia T. Tharpe, chief storyteller and strategist at advertising and marketing, branding, and communications company FayeVaughn Inventive, advised Fortune. “Influencers, by nature, converse on to customers in a private and sometimes informal method, which might make legacy manufacturers really feel out of contact or inaccessible.”
Which means manufacturers like Michael Kors want to search out new methods to keep up their standing whereas adapting to the “immediacy and engagement” influencers supply, Tharpe mentioned.
Rebecca Horan, proprietor and model strategist at Rebecca Horan Consulting, additionally mentioned it may be tough for legacy manufacturers to compete with an natural “social media darling,” which means the publish went viral with out paid promoting behind it.
“Even when the model have been to channel all of its advertising and marketing funds into paid influencer advertising and marketing, nothing can actually match the gross sales affect of getting the nice fortune to enter the zeitgeist on a rocketship, like Aupen skilled,” Horan advised Fortune.
However, “the query then turns into, does that rocketship model have endurance or is it successfully a one-hit-wonder?”
The trial is predicted to complete on Tuesday. Whereas it’s inconceivable to foretell the result, the trial shines a light-weight on a few of the challenges dealing with the posh vogue trade.
“The outcome might set a precedent for a way luxurious manufacturers function within the fashionable market,” Tharpe mentioned. If Capri is present in violation of antitrust legal guidelines, “it might result in elevated scrutiny of enterprise practices inside the vogue trade, probably altering how manufacturers collaborate and compete.”
