In a surprising turn, Tapestry Inc., the parent company of fashion powerhouses Coach, Kate Spade, and Stuart Weitzman, has reported a subtle yet significant increase in its yearly revenue, reaching $6.67 billion for the year ending June 29, 2024.
This figure narrowly surpasses analyst expectations of $6.65 billion, and it’s an indication that the company has weathered the industry’s downturn better than many had predicted. Tapestry’s shares reflected investor optimism, rising 5.6% in pre-market trading following the announcement.
In the fourth quarter, Tapestry recorded revenues of $1.59 billion, slightly higher than the anticipated $1.57 billion, despite a 2% year-on-year decline.
The European market emerged as a bright spot, with revenues increasing by 17%. Similarly, revenues in “Other Asia” increased by 7%, spearheaded by robust demand in Korea.
However, the picture was less rosy in China, where revenues remained flat year-over-year despite a noticeable decline in the second half of 2024.
“The recovery in China has been slower than expected.”
Joanne Crevoiserat, CEO
North America, Tapestry’s home market, reported a 1% dip in sales, a reflection of the “ongoing challenging consumer backdrop,” as explained by CFO Scott Roe. Meanwhile, Japan, a consistent performer for many luxury brands, saw a 3% decrease, marking a rare downturn in an otherwise stable market.
Among Tapestry’s brands, Coach stood out with record-breaking earnings, surpassing $5 billion in annual sales, marking a 3% year-on-year increase.
This growth was primarily fueled by the popularity of its handbags, especially the Tabby bag, whose fourth-quarter sales nearly doubled compared to the previous year.
“Coach continues to build strength on strength, highlighting the power of expressive luxury,”
Joanne Crevoiserat, CEO
Conversely, Kate Spade experienced a 6% decline in revenue, and Stuart Weitzman faced a more severe downturn with a 14% drop.
Tapestry is actively working to replicate Coach’s successful strategy across these brands, aiming to “accelerate growth at Kate Spade and Stuart Weitzman while building on the momentum of Coach,” according to Crevoiserat.
The company has implemented executive changes to this end, appointing Sandeep Seth as the Chief Growth Officer for Tapestry and bringing Eva Erdmann on board as the new CEO and president of Kate Spade starting in October.
Looking ahead to fiscal 2025, Tapestry projects its revenues to slightly rise to $6.7 billion despite the ongoing global economic challenges.
“The year ahead will again require agility and adaptability, controlling the factors we can and managing our business responsibly to drive long-term growth,”
Joanne Crevoiserat, CEO
In conclusion, Tapestry’s modest yet strategic growth, particularly in key markets like Europe and Korea, coupled with Coach’s success among younger consumers, positions the company favorably amidst a challenging economic landscape. As the luxury fashion industry navigates uncertain times, Tapestry’s strategy of leveraging its brand strengths and exploring new synergies could be the key to long-term success.
