Dive Brief:
- Tapestry Inc. reported flat net sales of $1.5 billion for Q1 of its 2025 fiscal year, according to a press release Thursday.
- The results beat Tapestry’s expectations, and the company attributed the success to Coach, its largest brand, which grew 1% year over year. The Stuart Weitzman brand grew 2%, while Kate Spade fell 7%.
- By region, Tapestry’s revenue fell 1% in North America, 4% in China, and 8% in Japan. Sales in Europe, however, grew 27% and the Asia region, excluding China and Japan, grew 11%.
Dive Insight:
The company raised its full-year outlook for the 2025 fiscal year. It now expects to have revenue of more than $6.75 billion, which would mark a 1% to 2% year-over-year growth.
Thursday’s earnings report was Tapestry’s first since its proposed merger with Capri Holdings was blocked by a federal judge last month. The Federal Trade Commission sued to block the $8.5 billion deal in April, accusing Tapestry of anticompetitive behavior. The judge ruled in favor of the FTC, but both Tapestry and Capri said they would appeal the decision.
Tapestry’s press release didn’t reference the legal decision or Capri, apart from clarifying that its outlook didn’t include revenue, interest or earnings from the proposed acquisition.
However, on the earnings call with analysts, CEO Joanne Crevoiserat restated that the company believes the judgment is incorrect, and in the interim, the company is working on its brand building through its existing business. On the call, an analyst asked about Tapestry’s outlook for the company and future mergers and acquisitions, were the deal to not go through.
“We have a bold vision for our existing business and we have tremendous runway ahead,” Crevoiserat said. “Our focus is on our largest value creation opportunities. Those are sustaining healthy growth at Coach while reigniting growth at Kate Spade…In any scenario, we have foundational investments, and that includes investing in our organic business, and we have much more growth to unlock.”
If the deal doesn’t close, the company doesn’t expect to pursue more M&A in the near term, Crevoiserat said.
The company is looking to boost its Kate Spade brand, which has been struggling over the last several quarters. Part of the strategy included naming a new brand president and CEO, Eva Erdmann, formerly of L’Oréal.
Coach, however, has represented a large growth opportunity for the company. On the call, Crevoiserat noted that Coach was appealing to younger customers. In Q1, Tapestry acquired 1.4 million new customers in North America and more than half were Gen Z and millennials, per the release.
Following the ruling blocking the deal, David Swartz of Morningstar Research Services told sister publication Fashion Dive that because Coach was in good shape, losing the merger would be more positive for Tapestry than Capri.
