Fashion designer Michael Kors told a federal judge that the handbag business is so competitive and diverse that he just became aware of one brand after seeing a photo of a bag on Taylor Swift’s arm.
“When I looked at the brand, the website crashed immediately,” Kors said of Aupen, the label behind a popular celebrity purse from last year that was also carried by Jennifer Lawrence, Kylie Jenner, and Olivia Rodrigo.
The agreement would unite Tapestry’s Coach, Kate Spade, and Stuart Weitzman with Capri’s Michael Kors, Versace, and Jimmy Choo to form one of the world’s largest fashion companies. US antitrust regulators are trying to prevent the merger, arguing it will reduce competition in the market for “accessible luxury” handbags. It is the US Federal Trade Commission’s first challenge to the fashion industry under Chair Lina Khan, after fighting takeovers in industries ranging from technology to supermarkets with varied outcomes.
The companies contend that competition in the handbag market is quite diversified, ranging from a $2.99 Trader Joe’s tote that went viral to European luxury brands that cost hundreds of dollars. They argue that the acquisition is critical for revitalizing Kors’ moribund handbag brand.
Kors, 65, told US District Judge Jennifer Rochon how he established his first women’s clothing brand in 1981 from his Manhattan apartment, as well as the highs and lows of his four-decade career.
“Sometimes you’ll be the hottest thing on the block, sometimes you’ll be lukewarm, sometimes you’ll be ice cold,” he told the judge. He informed the court that his brand has been declining in recent years.
“I think we’ve reached a point of brand fatigue,” Kors said. “It’s in a state of stasis at this point.”
He informed Rochon that Capri has been working to revive the brand, but it hasn’t been successful because to “financial constraints.” According to GlobalData, the merger would create the world’s fourth-largest luxury company and the second-largest in the Americas behind LVMH.
Analysts at TD Cowen, led by Oliver Chen, describe accessible luxury handbags as costing $150 on average and estimate the US market size to be $10 to $15 billion. According to the researchers, Coach has an 11% share of the market, followed by Michael Kors at 9%.
Testimony is set to end on Tuesday. Rochon, who is presiding over the case without a jury, will hear final arguments on September 30 and then determine whether to issue an injunction preliminarily halting the transaction while an FTC internal proceeding is ongoing. An order delaying the transaction would effectively terminate it.
During Kors’ hearing, a Capri lawyer questioned the designer about which brands he considered competitors to his bags.
“It has become much more elastic — everything from Lululemon, Zara, Louis Vuitton, to resale,” he said, referring to second-hand sales, which were not common in the 2000s but are now available to a large number of people. “Now everybody is out there.”
According to Kors, the choices of celebrities and online influencers, who are frequently paid to endorse specific companies, can cause sales to surge. Because of the rise of social media, especially TikTok, it is much easier to create a new brand and become a “sensation,” he said.
However, he told the judge that he was very certain that was not the case with mega-celebrities such as Swift, Beyoncé, and Madonna.
“None of these brands have the money to pay them,” he informed me.
