Tapestry, parent of lifestyle brands Coach, Kate Spade, and Stuart Weitzman, has posted net sales of US$1.51 billion for the first quarter, a small improvement versus the prior year.
Excluding headwind from currency due to the appreciation of the US dollar, revenue increased approximately 2 per cent year over year. Gross profit was $1.1 billion compared to $1.05 billion in the year-ago period.
Neil Saunders, MD of GlobalData, said the flat outcome is not too bad amid the slowdown in the luxury market, but gives the impression that the group is running out of steam as consumers start to curtail spending.
Coach’s sales grew 3.4 per cent, while those of Kate Spade and Stuart Weitzman dropped 5.8 per cent and 19.4 per cent, respectively.
“Coach has more of an international profile which has helped to lift the numbers – especially in Asia where sales in China grew rapidly – whereas Kate Spade and Stuart Weitzman are more exposed to the relative sluggishness of the North American market,” Saunders commented.
Kate Spade’s performance may improve in the next quarter with potential to boost sales during the holidays. Meanwhile, Stuart Weitzman is having too little visibility as it is easily overlooked and nowhere near sufficiently differentiated, he added.
The company ended the quarter with a $54 million inflow of free cash compared to an outflow of $198 million in the prior year.
In August, it entered a definitive agreement to acquire Capri Holdings Limited, adding Michael Kors, Jimmy Choo and Versace to its portfolio.
“Through a relentless drive to fuel brand magic and deliver for our customers, we are confident in our ability to achieve organic top and bottom-line gains, supported by our data-driven, direct-to-consumer operating model that enables speed and agility,” said Joanne Crevoiserat, CEO of Tapestry.
For FY24, the company expects revenue of $6.7 billion, a 2 to 3 per cent growth on constant currency.
“Overall, Tapestry is in a good place. However, gains are clearly becoming harder to achieve – which is why the acquisition of Capri is attractive,” said Saunders.
