The Antitrust Battle Over Coach and Michael Kors

The Federal Trade Commission (FTC) is taking legal action to prevent Tapestry, the company behind Coach, Kate Spade, and Stuart Weitzman, from acquiring Capri Holdings, which owns Michael Kors, Versace, and Jimmy Choo. This lawsuit centers around concerns that the combined company would create a powerful force in the luxury handbag market, leading to higher prices for consumers.

• The FTC argues that the merger would result in a "bag behemoth" with the ability to increase prices for shoppers.
• They claim that the combined entity would have the power to limit competition and potentially offer fewer choices to consumers.

Michael Kors' Testimony: Brand Fatigue and the Power of TikTok

Michael Kors, the founder and chief creative director of his eponymous brand, took the stand in the antitrust trial. He acknowledged that the Michael Kors brand has faced challenges and a decline in popularity, highlighting the fast-changing landscape of the fashion industry. He spoke about the rise of social media platforms like TikTok and the influence of celebrities such as Taylor Swift and Beyoncé in shaping trends.

• Kors expressed concerns about the brand experiencing "brand fatigue," suggesting a need for a revamp.
• He recognized the power of celebrities and social media influencers in promoting brands, citing the rapid growth of a new handbag company, Aupen, after Taylor Swift was seen carrying one of their bags.

Coach and the Tapestry Perspective

Tapestry and Capri, the companies involved in the proposed merger, have argued against the FTC's claims. They argue that the luxury handbag market is becoming increasingly diverse with the rise of online retailers and secondhand marketplaces, which offer consumers a wider range of choices.

• They believe that the competition in the luxury handbag market is stronger than the FTC suggests.
• They contend that the merger will benefit consumers by creating a more efficient and innovative company.

Macy's Perspective on Coach and Michael Kors

Jeff Gennette, the former CEO of Macy's, testified about the impact of Coach and Michael Kors on the department store's sales. He stated that Macy's had leaned heavily on Michael Kors' brand, leading to a decline in sales when the brand's popularity diminished.

• Gennette highlighted the importance of a strong brand portfolio for retailers.
• He acknowledged that when a brand experiences a downturn, it can negatively affect the retailer's sales.

The Future of Coach and Michael Kors

The outcome of this antitrust trial will have significant implications for Coach and Michael Kors, as well as for the luxury fashion industry as a whole. The trial is expected to conclude with testimony from economic experts on both sides.

• If the FTC prevails, the proposed merger would be blocked.
• If the companies are successful, the deal would proceed, potentially creating a dominant force in the luxury handbag market.