Dive Brief:
- Tapestry Inc. net sales fell to $1.59 billion in its fourth quarter, marking a 2% year-over-year decrease, according to a company press release Thursday. The company’s net sales for fiscal 2024 grew 1%, totaling $6.67 billion.
- Coach, which had previously been the brand seeing the most growth, was flat for the quarter. Kate Spade and Stuart Weitzman both saw year-over-year Q4 decreases, by 6% and 19%, respectively.
- The company set its revenue expectations for fiscal 2025, and said it expects growth of 1% to about $6.7 billion.
Dive Insight:
The company’s outlook doesn’t include the revenue impact of its proposed acquisition of Capri Holdings, which remains in limbo as the deal faces a Federal Trade Commission challenge.
The acquisition, announced last year, would combine Tapestry’s stable of brands with Capri’s Michael Kors, Versace and Jimmy Choo brands, and would create one of the largest luxury conglomerates in the United States. The FTC sued to block the deal in April, saying it would “eliminate fierce competition between the companies” and give Tapestry a “dominant share of the ‘accessible luxury’ handbag market.”
In its press release Thursday, Tapestry reiterated that it was confident in the merits of the deal and the “pro-competitive, pro-consumer nature” of the transaction, and remains focused on closing the acquisition in this calendar year.
Capri reported its first quarter results last week, in which its revenue fell 13.2% year over year.
“There was a lot of discussion of Capri’s declining results on Tapestry’s call,” David Swartz, senior equity analyst for Morningstar Research Services said in an email to Fashion Dive. “Michael Kors is not doing well at all, but Tapestry remains confident that it can fix the brand.”
Michael Kors revenue fell 14.2% year over year, per last week’s earnings.
Tapestry CEO Joanne Crevoiserat said in the release that the company’s fourth quarter results exceeded expectations.
“Importantly, through an unwavering focus on powering innovation and consumer connections, we meaningfully advanced our strategic agenda in fiscal year 2024, delivering strong financial results against a dynamic backdrop,” Crevoiserat said.
During the quarter and the fiscal year, the company’s sales in North America decreased by 1%. Sales in China fell 13% during the quarter, and saw no change during the fiscal year. Sales in Europe increased by double digits both during the quarter and full year, by 26% and 17%, respectively.
Despite Coach’s sales remaining flat, Swartz said the brand’s performance was good considering the weakening luxury demand and its high gross margin.
For the fiscal year, Kate Spade revenue fell 6%, and Stuart Weitzman revenue fell 14%.
“Kate Spade and Stuart Weitzman aren’t performing well at all and are not providing much value to Tapestry,” Swartz said.
Earlier this month, Tapestry hired Eva Erdmann as the president and CEO of the Kate Spade brand. The move is expected to help accelerate growth at the brand amid consistent revenue declines.
Tapestry ended its fiscal year with $825 million in inventory, which was 10% below the prior year’s ending inventory of $920 million, per the release.
