Dive Brief:
- Tapestry reported record high revenue of $1.6 billion for the third quarter of fiscal 2025, representing a 7% year-over-year increase, according to a Thursday press release.
- The increase was driven entirely by the company’s Coach brand, which reported a revenue increase of 13% year over year to $1.3 billion for the period. Kate Spade revenue fell 13% to $245 million for the period.
- At Stuart Weitzman, revenue fell 18% to $46 million in the third quarter. Tapestry agreed in February to sell the brand to Caleres in a $105 million cash deal, which is expected to close this summer.
Dive Insight:
Tapestry’s second straight quarter of record growth beat estimates and the company’s stock rose by as much as 7% in early morning trading.
As a result of the strong earnings report, Tapestry raised its fiscal 2025 revenue outlook to approximately $6.95 billion, representing 4% year-over-year growth, versus the previous guidance of about 3%, per the company.
“[W]hile the external backdrop is complex, our vision remains clear,” CEO Joanne Crevoiserat said in the release. “We maintain a bias for action and will harness our competitive advantages, including our global scale, compelling value, and strong fundamentals, to adapt and win in any environment. We are confident in our future and the meaningful opportunity to deliver durable growth and shareholder value.”
In North America, which makes up 60% of the company’s market share, third-quarter revenue rose 9% to $952 million. Meanwhile, in Europe, which holds about 6% of Tapestry’s market, revenue skyrocketed 35% to $93 million.
In China, revenue grew 3% to $279 million, while in Japan revenue fell 8% to $138 million, and in the rest of Asia, including Malaysia, Australia, South Korea and Singapore, revenue rose 11% to $94 million.
Neil Saunders, managing director of GlobalData, said that in the current environment, a brand posting accelerating sales and raising guidance is a rare thing, and called the results “very impressive.”
He also said that the brand’s growth in Q3 came with some caveats.
“As much as Coach deserves credit for its performance, our data show that some of the hefty uplift this quarter is the result of consumers pulling forward purchases because of concerns that prices could rise because of tariffs in the months ahead,” Saunders said in emailed comments. “This factor is unlikely to repeat itself to the same extent in the periods ahead, so future growth is likely to moderate. Even so, the fact that consumers are prioritizing Coach bags during a time of disruption underlines the desirability factor the brand has created around its products — and this generally bodes well for performance.”
Saunders added the Kate Spade brand lacked coherence and good storytelling.
“Basically, while Coach is a ‘must-have’ for many shoppers, Kate Spade is only a ‘kind of nice to have,’” he said. “This needs to change if the brand is to swing back into growth.”
Regarding Stuart Weitzman, Saunders said the brand was “now in freefall,” but that the pending sale to Caleres meant “this will soon not be Tapestry’s problem.”
