Potential Price Hikes Loom Large in Tapestry-Capri Merger Trial business, fashion, fashion news

The proposed $8.5 billion merger between fashion holding companies Tapestry and Capri Holdings is facing intense scrutiny from regulators who fear the deal could lead to higher prices for consumers. On Tuesday, during a trial aimed at blocking the merger, a top Tapestry executive testified that there is indeed room for price increases on Capri’s Michael Kors brand if the companies were to combine.

The Federal Trade Commission (FTC) presented slides from Tapestry’s internal research deck, sent to CEO Joanne Crevoiserat in 2022 by Elizabeth Harris, senior vice president for global strategy and consumer insights. The slides highlighted a significant price gap between Coach and Michael Kors handbags, suggesting an opportunity to raise Michael Kors prices.

Harris acknowledged the potential for price adjustments based on this disparity but emphasized that Tapestry considers various factors when setting prices, including brand positioning, design, material costs, and market dynamics. She stressed that the slides presented a preliminary data analysis and did not dictate any specific pricing strategies.

The FTC’s concerns stem from the potential elimination of competition between Tapestry brands like Coach, Kate Spade, and Stuart Weitzman, and Capri’s portfolio which includes Michael Kors, Jimmy Choo, and Versace. The commission argues that merging these rival companies could reduce consumer choice and drive up prices.

While Harris admitted that the slides omitted certain cost factors, she maintained that they were part of a preliminary market analysis initiated by Crevoiserat to explore potential merger and acquisition targets. She further stated that she had not revisited the deck after sharing it with Crevoiserat in August 2022.

Tapestry declined to comment on the ongoing litigation but reiterated its pretrial statement asserting that the proposed merger will ultimately benefit consumers. The trial, overseen by District Judge Jennifer Rochon, is expected to conclude next week, with a ruling anticipated within one to three months thereafter.