The Blocking of the Tapestry-Capri Merger Spells Trouble for American Fashion

So much for America’s LVMH.

In a move that shocked many in the fashion industry, Judge Jennifer Rochon in the Southern District of New York on Thursday blocked the $8.5 billion merger between Coach-parent Tapestry and Michael Kors owner Capri Holdings. The preliminary injunction, which comes after seven days of testimony last month, is a win in the Federal Trade Commission’s suit to deter the union of three major players — Coach, its sister brand Kate Spade, and Michael Kors under Capri — in what it refers to as the “accessible luxury” market.

“The Court finds that the merging parties are close competitors, such that the merger would result in the loss of head-to-head competition,” Rochon wrote in her 169-page order and opinion Thursday.

Tapestry has said it will appeal the decision but the ruling significantly shrinks the likelihood of the deal’s completion. “It may be that delay equals death,” said Susan Scafidi, founder of the Fashion Law Institute at Fordham Law School.

This means America’s answer to luxury conglomerates like LVMH and Kering will have to wait another day. And without Tapestry, Capri, which also owns Jimmy Choo and Versace, will be left in the lurch to repair its own mounting issues, including declining sales. Its stock nearly halved Friday morning, while Tapestry shares shot up 14 percent.

The ruling is also an unfortunate omen to any future merger or acquisition in fashion and beyond, insiders say, signalling a heightened degree of risk and costs for dealmakers.

“It will put some firms off to corporate activity and it also means certain deals that would’ve been healthy for the market or the companies themselves might not go ahead,” said Neil Saunders, managing director of GlobalData Retail. “It’s a very negative thing.”

The ruling championed the FTC’s primary argument that if Tapestry and Capri were to come together, they could raise prices, lower wages for workers and threaten the livelihood of other brands that also offer handbags in the $100 to $1,000 range.

This conclusion, however, amounts to a misunderstanding of how consumers actually shop, retail experts said. While Coach and Michael Kors refer to each other as main competitors, a fact that Rochon cited multiple times in her opinion, the handbag space is rife with options under $1,000, from entry-level designer pieces (albeit a limited selection) by Chloé and Loewe to emerging brands like Staud and DeMellier. The secondhand market opens up another sea of choices. During the trial last month, Tapestry attorney Lawrence Buterman presented to the judge a Chanel bag the company procured for $900 from an undisclosed vendor.

“The court seems to really think that buying one brand is very much like buying another, like the way you might buy one hammer over another,” said Scafidi. “It leaves no space for understanding that trends change, that brand’s fortunes can rise and fall overnight and that fashion is not predictable in a way that a commodity product might be.”

For now, Tapestry will fight to overturn the blocking as the FTC continues its own investigation into the merger.

“Today’s decision granting the FTC’s request for a preliminary injunction is disappointing and, we believe, incorrect on the law and the facts,” Tapestry said in a statement Thursday. “We intend to appeal the decision, consistent with our obligations under the merger agreement.”

However, timing isn’t on their side. If the deal doesn’t close by Feb. 10, as outlined in its provisions, either party can walk away without penalties.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

Kering, pounded by luxury slowdown, warns on profit. Sales at the French group fell 16 percent in the third quarter as a market-wide downturn hit hard. At flagship brand Gucci, where revenue fell 25 percent, management is exploring store closures while betting on a revamped handbag programme to jumpstart demand.

Hermès continues to outshine rivals with sales up 11.3 percent. The French luxury company generated €3.7 billion ($3.99 billion) in revenue for the three months ending in September. The slowest growth came from the Asia Pacific region, excluding Japan, where sales were up 1 percent.

Zegna Group’s third quarter sales fell 7 percent. The Italian menswear group was heavily impacted by a 22 percent revenue drop in Greater China. Sales at the Zegna brand grew slightly while Thom Browne and Tom Ford posted double-digit declines.

Ex-Abercrombie CEO arrested amid sex trafficking investigation. Jeffries was arrested with his British partner, Matthew Smith, and a third man, Jim Jacobson, as authorities investigate allegations that the men sexually exploited and abused young men at parties. Jeffries and his partner denied all allegations in a court filing in response to the lawsuit.

Amazon sets ultra-low pricing plans for Temu rival store. Amazon is reportedly implementing strict price caps for a new low-cost storefront, limiting items like jewellery to $8 in an effort to compete with discount rivals such as Temu and Shein. Amazon plans to ship orders to US customers directly from a facility in Guangdong, China.

Mike Ashley’s Frasers pulls bid for handbag maker Mulberry. Frasers said Mulberry had not properly engaged with its offer to buy the remainder of the company, in which it already holds a 37 percent stake. Ashley is still pushing for a board seat at the British handbag maker.

Mulberry to cut nearly a quarter of corporate roles. The British handbag maker will lay off around 85 people globally as it aims to chart a path back to profitability after fending off a takeover bid from billionaire Mike Ashley’s Frasers Group. The job cuts are focused on the company’s corporate team, and won’t affect its factories, retail stores or warehouses.

Gatemore seeks Watches of Switzerland buyback. The activist investment firm has acquired a stake in Watches of Switzerland Group Plc and is urging the luxury watch retailer to implement an aggressive share buyback of £25 million to £50 million. The firm is also encouraging a US listing.

Europe’s textile recycling sector warns of ‘unprecedented crisis.’ Geopolitical disruptions and a growing glut of low-value ultra-fast fashion are creating an unsustainable market dynamic, even as regulators are pushing to tackle clothing waste, according to two major lobby groups.

Moncler stages mega-scale ‘Genius’ event in Shanghai. The Italian skiwear specialist showcased its latest round of celebrity and designer collaborations in a series of pavilions in Shanghai. More than 8,000 guests were on hand for “The City of Genius” event including A$AP Rocky, Edward Enninful, Willow Smith and Rick Owens.

Gucci picks Florence for next Cruise show. The Kering flagship will show its 2026 Cruise collection in the Italian city where Gucci was founded, amid a push to reconnect the label with its heritage story and elevate its image. The show will take place on May 15, 2025 at a location still to be revealed.

Chanel to sponsor Oxford-Cambridge boat race. The rowing competition between Oxford and Cambridge universities is the UK’s oldest major sporting event. In what is Chanel’s first move into sports sponsorship, the French luxury house will become the event’s title sponsor and official timekeeper as part of a long-term partnership.

Lacoste to sponsor the Rolex Paris Masters tennis tournament. The “premium” partnership runs until 2030. It comes as the brand, founded by French tennis champion René Lacoste in 1929, continues its push upmarket as well as its efforts to reassert its sporting heritage under creative director Pelagia Kolotouros.

THE BUSINESS OF BEAUTY

L’Oréal third quarter sales miss expectations as China buys less. The company said sales for the three months to the end of September were €10.28 billion ($11.11 billion), a 3.4 percent rise on a like-for-like basis at constant exchange rates.

Unilever sales rose 4.5 percent, narrowly beating expectations. The consumer goods giant posted its biggest gain in sales volumes in three-and a-half years, after winning back more shoppers with product innovations and slower price increases. The company is keeping its full-year outlook for 3-5 percent underlying sales growth.

Activist investor Starboard targets Neutrogena-owner Kenvue. The hedge fund has taken a stake in the ailing consumer products firm, which has seen its stock price slide more than 18 percent since going public last year. Starboard may want the company to review how it positions its brands and how they are priced in order to boost its performance.

Beiersdorf sales rose 6.5 percent. The German beauty conglomerate saw its sales lift ahead of analyst expectations, led by a North American rebound and skincare, but continued pressure in China weighed on overall growth. Nine-month sales rose 6.5 percent organically to €7.55 billion ($8.15 billion) from €7.26 billion a year earlier.

Rianta Capital invests in biotech beauty brand. Reome, a UK-based biotechnical skincare label founded in 2023, announced that it raised over £1.1 million ($1.4 million) in an initial fundraising round. The funding will allow the brand to expand its product offerings, wholesale distribution, and direct-to-consumer business.

Astier de Villatte sells majority stake to Vesper. Founders Ivan Pericoli and Benoît Astier de Villatte will retain a “significant stake” and continue to creatively lead the brand following the sale.

Interparfums sales rise 15 percent, buoyed by fragrance demand. The European fragrance licensee beat analyst expectations in its third-quarter earnings, with sales lifting to $425 million. Its European arm showed the most buoyancy, with sales rising 21 percent to $282 million, while the US showed slower growth, lifting 9 percent to $146 million.

Beauty on-demand provider Ruuy raises $2.6 million. The investment was led by Praetura Equity Finance, a Manchester-based fund dedicated to British businesses. Money raised will be used to increase its presence in France and Switzerland, as well as expanding its reach across the UK.

Venrex and the British Beauty Council launch beauty venture fund. The fund, Venrex BBCo I, will make investments in a variety of consumer and B2B beauty businesses. With a focus on early-stage firms, the average check size will range from $130,000 to $1.3 million.

PEOPLE

Marie Leblanc named Courreges CEO. The former Victoria Beckham chief executive will succeed Adrien Da Maia, who led the brand’s turnaround with designer Nicolas Di Felice. LeBlanc will be tasked with opening a new cycle of growth under the ownership of Pinault family holding company Artémis.

Mike Ashley wants Boohoo to make him its new CEO. Boohoo CEO John Lyttle stepped down last week as the company announced a strategic review that could lead to its breakup. Ashley owns more than a quarter of Boohoo’s shares, as well as major stakes in retailers including Hugo Boss and Mulberry.

Dior names Bollywood star Sonam Kapoor new ambassador. Kapoor has previously worked as a brand ambassador for L’Oréal and watch brand IWC Schaffhausen as well as appearing in a commercial for Pepsi. Dior has sought to underscore its links with India in recent years.

Compiled by Yola Mzizi.