FTC sues to block Coach parent Tapestry's acquisition of Capri Holdings

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The U.S. Federal Trade Commission on Monday sued to block the $8.5 billion acquisition of Capri Holdings by Coach and Kate Spade’s parent company,…

The move by regulators brings at least a temporary halt to a deal that would marry two major names in American luxury retail and put six fashion brands under a single company: Tapestry's Coach, Kate Spade and Stuart Weitzman and Capri's Versace, Jimmy Choo and Michael Kors. With the transaction, the luxury brands could be poised to better compete with European luxury names, such as Burberry and LVMH's Louis Vuitton.

The deal had been expected to close in 2024. In a financial filing on April 10, Tapestry said it had secured approval from regulators in Europe and Japan, but was still waiting for the approval of U.S. officials. Both Tapestry and Capri have been under pressure, as consumers continue to be choosier with discretionary spending. Yet Capri, in particular, has been more vulnerable because of its heavier reliance than Tapestry on department stores and other wholesale retailers.

Led by Crevoiserat, Tapestry has raised the profile of Coach's brand, attracted younger shoppers, and tried to lean on fashion and loyalty, rather than deep discounts, to drive higher sales and profits. The vast majority of Tapestry's sales are through its own website and stores, with wholesale accounting for only about 10% of sales globally in the most recently reported fiscal quarter.

As of April 19, shares of Tapestry are up about 10% so far this year compared with the stock of Capri, which has fallen about 24% over the same period.Lululemon to shutter Washington warehouse, lay off 128 employees

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FTC may try to block yet another business mergerThe FTC is reportedly planning to file suit to block a merger between luxury fashion firms Tapestry and Capri, the parent companies of several prominent brands like Versace and Coach.
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