Dive Brief:
- Coach again led holding company Tapestry Inc. to record sales for its fourth quarter and full fiscal year 2025, the company said in an earnings report Thursday. The brand saw fourth-quarter revenue gains of 14% year over year and a 10% year-over-year increase for the fiscal year.
- Tapestry’s total fourth-quarter revenue was $1.7 billion, an 8% year-over-year increase. The company’s full-year revenue totaled $7 billion, up 5%.
- Now that Tapestry has sold the Stuart Weitzman brand, it is focused on Coach and Kate Spade, the latter of which has consistently seen revenue declines. In Q4, Kate Spade revenue fell 13%, and for the whole year, revenue fell 10%.
Dive Insight:
Despite a strong fourth quarter, Tapestry still experienced a $517.1 million net loss for the period.
The loss can be attributed to Tapestry missing out on the extinguishment of debt related to the failed bid to acquire Capri Holdings, as well as a write-down of brand value for Kate Spade, Neil Saunders, managing director of GlobalData, said in emailed comments.
“The former is somewhat outside of Tapestry’s control as the FTC kiboshed the deal,” Saunders said. “The latter is down to Tapestry's inability to turn the brand around, so responsibility lies on the shoulders of management.”
The revenue declines at Kate Spade show the brand is not where it should be, said Saunders, who added that its product assortment is “somewhat confused.”
“There are some nice individual pieces, but the whole assortment is not all that compelling, and it lacks a coherent narrative to pull it together,” Saunders said. “This makes it a nice-to-have, rather than a must-have — which in the current environment is a sales killer.”
This is in contrast to Coach, which has gained middle-income consumers who have been squeezed out of the “super premium” category due to high prices, per Saunders.
The brand has also used social media marketing to attract new consumers and has taken a more “fashion-forward approach,” Saunders said.
Tapestry has made capturing a younger generation of consumers a key focal point. During the quarter, the company said it acquired about 1.5 million new customers in North America and more than 6.8 million customers during the fiscal year. The company said members of Generation Z and millennials represented about 60% of its new customers for the quarter and the year.
In the release, Tapestry CEO Joanne Crevoiserat said the company’s performance in Q4 demonstrated that its strategies were working.
“Looking ahead, the creativity, craftsmanship, and compelling value we offer at scale — combined with the agility of our operating model — position us to drive compounding long-term growth and shareholder value,” Crevoiserat said.
In Q4, Tapestry saw revenue grow in each region it operates in, except in Japan, which fell by 7%, and “Other Asia,” which was flat. The Greater China region grew the most, by 18%. North America revenue grew 8%, while revenue in Europe grew 13%. The company’s other region, which consists of licensing partners and sales in the Middle East, grew by 14%.
