Michael Kors, a renowned fashion designer, testified in a federal trial on Monday, highlighting the growing difficulty of keeping his brand relevant in today’s market. In a world where viral TikTok trends and celebrities like Taylor Swift can dictate fashion choices, Kors explained how even established brands like his can quickly fall out of favor.
Trial Context: The testimony took place as part of the ongoing antitrust trial, where the Federal Trade Commission (FTC) is trying to block Tapestry’s $8.5 billion acquisition of Capri Holdings. If approved, the deal would bring together six major fashion brands under one company: Tapestry’s Coach, Kate Spade, and Stuart Weitzman, along with Capri’s Versace, Jimmy Choo, and Michael Kors.
Kors’ Testimony on Brand Challenges: Kors, who founded his brand in 1981, testified about the shifting landscape in fashion, driven by social media and celebrity endorsements. He noted how brands often experience highs and lows, stating, “Sometimes you’ll be the hottest thing on the block. Sometimes you’ll be lukewarm. Sometimes you’ll be cold.”
He admitted that his namesake brand has recently experienced “brand fatigue” and is in need of a refresh to regain its standing among consumers.
FTC’s Concerns: The FTC argues that the merger of Tapestry and Capri would create a handbag powerhouse that could raise prices while offering customers fewer choices. The agency fears that having both Coach and Michael Kors under the same owner could diminish competition.
Defense by Tapestry and Capri: On the other side, attorneys for Tapestry and Capri have countered the FTC’s concerns, claiming that the handbag market has become more competitive. They pointed to the rise of both luxury brands and more affordable fast-fashion options, as well as the growth of online and secondhand marketplaces.
Financial Struggles of Michael Kors: Capri Holdings, which owns Michael Kors, has seen its stock fall by 24% this year, underperforming the broader S&P 500 index, which has risen by around 18%. In the last fiscal quarter ending in June, Michael Kors reported a 14.2% drop in revenue compared to the same period the previous year.
Celebrity Influence on Fashion: Kors mentioned that staying current involves keeping an eye on how celebrities influence trends. He gave an example of how Taylor Swift carrying a handbag from a lesser-known brand, Aupen, caused the company’s website to crash due to a surge in interest. “It shows you the power of women like this,” Kors remarked.
Impact on Retailers: Former Macy’s CEO Jeff Gennette also testified about the consequences of relying too heavily on one brand. He explained that Macy’s experienced financial difficulties when it depended too much on Michael Kors’ products, leading to over-discounting and poor sales performance.
Conclusion: As the antitrust trial nears its conclusion, the outcome could reshape the competitive landscape of the luxury handbag industry. Economists from both the FTC and the companies involved are expected to provide final testimony in the coming days.
