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It's been a whirlwind week in fashion, with ups and downs for some major players. Among the highlights: One $8.5 billion merger deal got the green light, and a sportswear retailer saw unexpected demand for a controversial brand.
Tapestry + Capri deal gets the go-ahead
After announcing an $8.5 billion merger last year, Tapestry (which owns Kate Spade and Coach), received regulatory clearance this week from the EU and Japan to acquire Capri Holdings—owner of brands including Versace and Michael Kors.
Why this matters: The US Federal Trade Commission hasn’t yet signed off on the deal; it’s probed for more information on the merger, which would significantly enhance Tapestry’s European luxury portfolio. In fact, its goal is to compete with French luxury conglomerate LVMH.
LVMH will weather luxury slump
Speaking of LVMH, it may have seemed immune to the luxury slowdown until now, but the mega luxury conglomerate is starting to see some impact from reduced consumer spending. It announced a 2% YoY revenue decline in Q1. The retailer, however, seems undeterred, and is reportedly planning to weather the downturn instead of thinking about lowering prices.
Why this matters: LVMH may be new to luxury’s losing streak, but its biggest competitor, Kering, has been dealing with a slump for months, as some of its biggest brands, including Gucci, YSL, and Bottega Veneta, reported a drop in sales earlier this year.
Adidas reports increased demand for Yeezy
There was once a time, not so long ago, when Adidas worried about how it would get rid of its excess Yeezy inventory after cutting ties with singer Ye (formerly Kanye West) over his antisemitic remarks. Today, the retailer is seeing such strong demand for Yeezys, along with its classic sneakers, that it “raised its profit target for the year,” Bloomberg reported. In its Q1 earnings report, the German brand now estimates it’ll hit 700 million euros ($743 million) in operating profit, up from 500 million euros.
Why this matters: At one point, the retailer was said to be considering burning all of its Yeezy merch, although CEO Bjørn Gulden later said that wasn’t a sound solution. Instead, the company decided to donate some of the proceeds from Yeezy sales to organizations fighting antisemitism and racism.