Mixed results for Tapestry amid weak Kate Spade sales
The parent company of Coach, Kate Spade and Stuart Weitzman reported first-quarter earnings that beat analyst estimates even as sales disappointed due to ongoing weakness at Kate Spade.
Tapestry Inc.’s net income fell to $20 million, or 7 cents per share, during the period ended Sept. 28, from $122.3 million, or 42 cents per share, a year ago. Adjusted earnings came to 40 cents per share, which was 3 cents ahead of analysts’ forecasts.
Net sales fell 2% to $1.36 billion, missing expectations for $1.37 billion.
Sales at Kate Spade fell 6% to $306 million. The brand’s global same-store sales plunged 16%, reflecting the product and merchandising challenges Tapestry said it had previously identified.
Same-store sales edged up 1% at Coach, whose revenue rose 1.0% to $966 million.
It was the brand’s eighth consecutive quarter of positive comparable store sales growth, led by digital and international channels.
Total revenues at luxury brand Stuart Weitzman fell 9% to $87 million.
Tapestry CEO and chairman Jide Zeitlin said the results were in line with expectations and that business internationally was stronger than in North America where it dealt with “continued industry headwinds.” Zeitlin became CEO in September, after spending 13 years as a board member and five as chairman, on the heels of disappointing fourth-quarter earnings.
Zeitlin said the company has initiated an in-depth review of its business to address both near-term and long-term opportunities to drive organic growth and profitability across the portfolio.
“Our imperative is to fuel desire for our brands and make investment decisions through a consumer-centric lens,” he said. “We are focused on becoming more agile, continuously leveraging data and technology, to increase our productivity and speed to market. These improvements will enable us to fund additional brand-building initiatives and to return capital to shareholders.”