NEW YORK — In a federal courtroom Monday, famed fashion designer Michael Kors spoke about the steep challenge of staying relevant in a world where brands can rise and fall based on viral TikTok videos and photos of bags on celebrity laps like Taylor Swift and Beyoncé.
Kors began the week of filing in its antitrust trial in Manhattan as a Federal Trade Commission lawsuit tries to block Tapestry$8.5 billion acquisition of Capri. The deal, if approved, would put six fashion brands under a single company: Tapestry’s Coach, Kate Spade and Stuart Weitzman, with Capri’s Versace, Jimmy Choo and Michael Kors.
The FTC on Monday called Kors, who founded his eponymous brand in 1981 at the age of 22 and is still its chief creative officer, to testify. However, in his remarks, Kors described how even well-known brands like his can struggle and lose the interest of shoppers.
“Sometimes you’re going to be the hottest thing on the block,” he said. “Sometimes you’ll be lukewarm. Sometimes you’ll be cold.”
He acknowledged that his namesake label has fallen out of favor and needs a refresh.
“I think we’ve reached the point of brand fatigue,” he said.
The FTC has argued that the combined companies, particularly with Coach and Michael Kors under the same owner, would create a handbag behemoth with the power to raise prices for customers while offering them the same or worse products.
Lawyers for Tapestry and Capri, on the other hand, disputed the FTC’s depictions of a unified handbag market. They said competition has increased as customers consider both pricier luxury brands and cheaper fast-fashion names and can shop from online platforms and second-hand markets only.
The lawsuit comes as consumers challenge high prices and when the outcome of a closely watched US presidential election could change the federal agency’s strategy.
Shares of Capri, which includes Michael Kors, reflect the tougher trend described by designer Kors. As of Monday afternoon, the company’s stock is down about 24% so far this year. That’s well behind its roughly 18% gains S&P 500 and Tapestry’s roughly 17% rise.
In the most recent fiscal quarter ended in late June, Michael Kors’ revenue fell 14.2% on a reported basis or 13.3% on a constant currency basis compared to the year-ago period.
Kors said he remains a student of the fashion industry and draws inspiration from spending time on store floors, talking to customers or watching people in places like airports. Even as an industry veteran, he said he has to move nimbly.
For example, she said she learned about Aupen, a newcomer to the handbag industry, when she saw a photo of Taylor Swift holding one of the company’s bags. When he went to the company’s website, it crashed, he said.
“It shows you the strength of women like her,” she said.
In another testimony on Monday, Fr Macy’s CEO Jeff Gennette said retailers also feel when brands lose some of their luster. Gennette, who retired early this year, said the department store’s sales took a hit because it relied heavily on the Michael Kors brand. He said the reduction in Michael Kors bags contributed to “a downward spiral that Macy’s was going through when I was there.”
The antitrust trial is expected to conclude Tuesday with testimony from economists, including one for the FTC and one for the companies.
