After calling off merger, Coach parent Tapestry’s holiday sales soar – CNBC

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It expects earnings per share of $4.85 to $4.90. It had previously forecast full-year revenue of more than $6.75 billion and full-year earnings per share of between $4.50 and $4.55.Tapestry’s strong results come less than two months after it called off a merger with Capri, after planning to appeal the blocked deal. The agreement, which companies had fought for in court, would have married America’s two largest luxury houses and put six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors.Tapestry’s results are also in sharp contrast to Capri’s. In Capri’s holiday quarter, which the company reported Wednesday, sales of Versace and Michael Kors tumbled by double digits. CEO John Idol took some of the blame, saying that the company had made missteps — including cutting lower-priced accessories that helped bring in newer customers.In a CNBC interview on Thursday, Tapestry CEO Joanne Crevoiserat said consumers are still selective about spending, but Coach has won their business by delivering “innovation, relevance and value.””That’s what our brand-building principles are focused on,” she said. “We have confidence that these brand-building principles and our ability to connect with consumers, regardless of the environment, remains strong.”Here is what Tapestry reported for the fiscal second quarter compared with Wall Street’s estimates, according to a survey of analysts by LSEG:In the three-month period that ended Dec. 28, Tapestry’s net income decreased to $310.4 million, or $1.38 per share, from $322.3 million, or $1.39 per share, in the year-ago period. The company’s adjusted earnings per share figure excluded some one-time items, including an interest expense and a provision for income taxes.Net sales rose to $2.20 billion from $2.08 billion in the year-ago quarter.Coach remained the company’s top performer in the holiday quarter, with revenue up 11% year over year. Kate Spade and Stuart Weitzman put up weaker results, with revenue declines of 10% and 15%, respectively.On Tapestry’s earnings call Thursday, CFO Scott Roe said the company’s full-year guidance includes the impact an additional 10% tariff on goods imported from China into the U.S. beginning Feb. 4. He said that is not expected to have a material effect on the company’s results, since it has very limited manufacturing in China.Tapestry does not have any production in Canada or Mexico, he said. Roe had said on Tapestry’s early November earnings call that less than 10% of the company’s sourcing comes from China.Tapestry is looking inside of the company to drive growth. In a CNBC interview, Crevoiserat said that Tapestry will hold off on mergers and acquisitions until it makes sure Coach can maintain growth and Kate Spade returns to sustainable growth, too.”It’s hard to put a timeline on it, but not in the near term,” she said of when the company would consider another deal.Tapestry plans to rev up popular styles at Coach, invest in Kate Spade’s turnaround efforts, and focus on customer acquisition in underpenetrated markets, such as Europe and China.Tapestry’s largest market is North America, with nearly 70% of its quarterly sales coming from the region in the holiday quarter. Yet Europe stood out with its gains in the holiday quarter. Revenue in the quarter rose 45% in Europe, 3% in Greater China and 4% in North America compared with the year-ago period. Sales in Japan, on the other hand, declined by 5% year over year in the quarter.Crevoiserat said on the company’s earnings call that Tapestry’s “runway for growth is significant” in Europe, since it has lower sales and fewer customers there.New and younger shoppers have also lifted Tapestry’s sales. Crevoiserat said on the company’s earnings call that Tapestry attracted about 2.7 million new customers in North America in the quarter and over half of those customers were Gen Z and millennials, she said.One of the company’s bestsellers in the quarter, particularly with newer and younger shoppers, was the Tabby, a shoulder bag that Coach had made in different colors and materials, she said. Its newer New York collection of bags has proven popular, too — including the Brooklyn, a shoulder bag that sells for $295, and the Soft Empire Carryall Bag 40, which sells for $695.Tapestry has ramped up its focus on Kate Spade, a brand that it’s trying to revive. Eva Erdmann, previously global president of L’Oréal’s Urban Decay Cosmetics, started as Kate Spade’s new CEO in October.On the earnings call, Crevoiserat said Tapestry will slash the number of Kate Spade’s handbag styles by more than 15% this fall and “work to build blockbuster handbag families.” She said it’s also focused on using new, compelling items, not discounts, to drive Kate Spade’s sales.”Decreasing our level of promotional activity will be a key building block of solidifying our brand and positioning it to scale in a healthy way globally over the long term,” she said.Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2025 CNBC LLC. All Rights Reserved. A Division of NBCUniversal
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Source: https://www.cnbc.com/2025/02/06/tapestry-tpr-q2-2025-earnings.html