NEW YORK CITY — Famed fashion designer Michael Kors spoke in federal court Monday about the daunting challenge of staying relevant in a world where brands can rise and fall based on viral TikTok videos and photos of handbags on the arms of celebrities like Taylor Swift and Beyoncé.
Kors opened the week of testimony in the Manhattan antitrust trial as a Federal Trade Commission lawsuit seeks Tapestry's acquisition of Capri for $8.5 billion. If the deal is approved, it will consolidate six fashion brands under one company: Tapestry's Coach, Kate Spade and Stuart Weitzman with Capri's Versace, Jimmy Choo and Michael Kors.
The FTC on Monday summoned Kors, who founded his eponymous brand in 1981 at age 22 and still serves as its chief creative director, to testify. Still, Kors in his remarks outlined how even legacy brands like his can struggle and lose the interest of shoppers.
“Sometimes you're the hottest thing on the street,” he said. “Sometimes you're lukewarm. Sometimes you're cold.”
He acknowledged that his namesake has fallen out of favor and needs a makeover.
“I think we've reached the point of brand fatigue,” he said.
The FTC has argued that the merger of companies, particularly with Coach and Michael Kors under the same ownership, would create a handbag giant that could raise prices for customers while offering the same or inferior products.
Lawyers for Tapestry and Capri, on the other hand, have questioned the FTC’s depictions of a consolidated handbag market. They have said competition has increased as customers consider both higher-end luxury brands and cheaper fast-fashion names, and can shop on online-only platforms and secondhand marketplaces.
The trial comes as consumers protest high prices and because the outcome of the closely watched US presidential election could change the federal agency's strategy.
Shares of Capri, which includes Michael Kors, are reflecting the tougher times described by designer Kors. As of Monday afternoon, the company's stock price has fallen about 24% so far this year. That lags behind the roughly 18% gain of the S&P 500 and Tapestry's increase of approximately 17%.
In the most recent fiscal quarter, which ended in June, Michael Kors' revenue fell 14.2% on a reported basis and 13.3% on a constant currency basis compared to the same period last year.
Kors said he’s still a student of the fashion industry, drawing inspiration from spending time on the shop floor, talking to customers or people-watching in places like airports. Even as an industry veteran, he said he has to move with agility.
For example, he said he heard about Aupen, a newcomer to the handbag industry, when he saw a photo of Taylor Swift holding one of the company’s handbags. When he went to the company’s website, it crashed, he said.
“It shows the strength of women like this,” he said.
In another testimony on Monday, former Macy's CEO Jeff Gennette said retailers are also feeling the pinch when brands lose some of their luster. Gennette, who retired earlier this year, said the department store's sales were hit because it relied too heavily on the Michael Kors brand. He said the markdown of Michael Kors handbags contributed to “a bad spiral that Macy's was going through when I was there.”
The antimonopoly case is expected to conclude Tuesday with testimony from economists, including one on behalf of the FTC and one on behalf of the companies.