Tapestry Inc has reported revenue of $2.1 billion for the second quarter, a 3 per cent increase year on year, with Coach leading the charge.
Sales of Coach rose 6 per cent to $1.5 billion during the three months ended December 30. However, both Kate Spade and Stuart Weitzman saw declines of 6 per cent and 4 per cent, respectively.
The company’s international revenue grew 12 per cent, including 19 per cent in Greater China, 6 per cent in Japan, 9 per cent in Other Asia, and 11 per cent in Europe. North America’s revenue was flat compared to last year.
Joanne Crevoiserat, CEO of Tapestry, said the results for the second quarter – the “key holiday season” – exceeded expectations thanks to innovative products, engaging storytelling, and operational excellence.
GlobalData MD Neil Saunders said the company’s good results followed a muted performance over the past six months. The growth was above the overall average of the US luxury market during the same period, he added.
Saunders attributed Coach’s success to a strong element of self-buying over November and December, as well as handbags and leather goods being popular gifts. The growth was also aided by updates to classic bags and the introduction of some new silhouettes.
“Coach continues to win new customers – with particularly good gains among younger cohorts. Most of this is driven by strong marketing, including on social media platforms,” Saunders noted.
Meanwhile, Kate Spade and Stuart Weitzman’s performance was “disappointing” as both businesses also reported modest dips in the prior year.
Saunders also noted that the company’s net income declined by 2.3 per cent despite the strong top line, mostly due to higher interest payments from the initial debt taken on to finance the Capri acquisition. “When interest payments are removed, Tapestry increased net income by a very respectable 10 per cent.”
For the full FY24, the company has raised its outlook, expecting revenue to rise 1 per cent to approximately $6.7 billion.
Saunders believed 2024 for the company will be dominated by the Capri acquisition, and success is far from guaranteed.
“This will absorb a lot of management’s time and will give them more challenged brands to sort out, in addition to Kate Spade and Stuart Weitzman,” he concluded.
