👉 Background: Tapestry is an American fashion company, and owns major brands like Coach, Kate Spade, and Stuart Weitzman. Capri is also a fashion conglomerate, with brands like Michael Kors, Versace, and Jimmy Choo.

👉 What happened: The US Federal Court has blocked Tapestry's bid to acquire Capri, stating it would reduce competition in the "accessible luxury" handbag market. If the acquisition were successful, Tapestry would own 59% of the accessible luxury handbag market.

👉 What else: Tapestry and Capri are planning to appeal the verdict, but the ruling was especially tough on Capri, which has been struggling turn around its Michael Kors brand. Because once a luxury brand goes mainstream, it’s not easy to reverse that.

What's the key learning?

💡Cats may have nine lives but luxury brands often only get one.

💡Luxury brands gain their status with exclusivity. They limit supply to amp up demand to be able to charge premium prices. But when a luxury brand doesn't balance its supply and demand correctly, it can lose its appeal with customers.

💡That's what happened with Capri's Michael Kors brand. It wanted to appeal to a broader demographic and instead became too mainstream, and its revenue dropped. Most brands don’t recover their image once their luxury appeal is lost, hence why Capri was really hoping this acquisition would land.