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MainFT, last night:
The Federal Trade Commission has sued to block US luxury goods group Tapestry’s $8.5bn acquisition of Capri Holdings, a move that threatens a bid to create a US rival to European giants LVMH and Kering.
The antitrust regulator on Monday alleged that the acquisition would eliminate “head-to-head” competition among the groups’ brands, including Capri’s Michael Kors as well as Tapestry’s Kate Spade and Coach.
Tapestry, understandably, is not best pleased with this situation, saying in a statement that “the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop”.
And its chief executive went further today in comments to the New York Times’s DealBook:
“It’s quite clear to us that they don’t understand how consumers shop today and they don’t understand the dynamics of a marketplace with no barriers to entry, constant influx of new competitors,” Joanne Crevoiserat, the company’s C.E.O., told DealBook.
She added that consumers could shop for bags at different retailers and on numerous websites. “Type in ‘black tote,’ you’ll see thousands of choices and hundreds of brands at any price point,” she said.
Obviously, this flavour of defence is par for the course in antitrust, but we were curious whether Crevoiserat has been serving a similarly smol bean line to investors. Has she warned them that Tapestry’s brands have so little cachet, and its products so much vulnerability on pricing?
Here are some highlights from recent earnings calls we pulled from AlphaSense transcripts:
Q2 earnings call, February 2024
Crevoiserat: We are creating a global house of iconic brands. And what’s important to us — the most important thing is that these brands are iconic and that they trade in attractive and growing categories.
Crevoiserat: …by the way, we grew gross margin across all our brands. I don’t know if I said that earlier. But really, it’s that pricing power, which is a combination of headline prices and discipline around discounts.
Crevoiserat: We love a competitive market, and we’re performing.
Q1 earnings call, November 2023
Crevoiserat: Overall, we remain excited by the opportunity to expand our house of powerful brands, increasing our position in growing and durable categories, with enhanced cash flow to invest in brand building while funding debt pay-down. This combination is transformational, and we are confident in our ability to execute, positioning Tapestry as a leader in innovation, talent development, and shareholder return for years to come.
Crevoiserat: [We] are still very confident in terms of how we’ve positioned the business, positioned our inventories, and positioned our innovation pipeline to speak to consumers in the world and in the dynamic backdrop that exists today.
Q4 earnings call, August 2023
Analyst: “[How] would you assess overall health of the handbag and accessories category globally today[?]
Crevoiserat: […] I’ll pick up the first part of that question in terms of the handbag category. This is an incredibly resilient and durable category. And we’re seeing it again, as we go through incredibly choppy demand environment around the world, the consumer continues to engage with this category in a very strong way. And it has a – the category has proven to be durable through downturns, resilient and coming out of downturns. And the challenges that we faced over the last three years have really helped us to navigate different headwinds in different regions of the world.
Q3 earnings call, May 2023
Scott A. Roe (chief financial officer): We’re not chasing the last dollar. We’re being disciplined, and I think this year is a great testament to that. It certainly developed differently than we thought, but when we look at the way in which we’re operating, the strong gross margin performance coupled with our inventories being in great shape, it’s evidence of strong discipline, the pricing power of the brands, and we continue to invest in growth longer term.
Crevoiserat: There’s a lot written about goods and services and where consumers are spending their money, but the handbag and leather goods category is a category that consumers use in all aspects of their lives. We saw demand even when people were locked in at home, and there was – our stores were closed and people were going nowhere…
…And the journey that we’ve been on in terms of brand building, it’s really understanding the consumer’s journeys, that we continue to leverage data to get deeper and deeper into those use occasions and their journeys and their needs emotionally and functionally. And that’s how we continue to deliver and deliver with pricing power.
Further reading
— Trevor Milton’s smol bean legal defence
