USA. Tapestry – the New York-based luxury group whose brands include Coach, Kate Spade and Stuart Weitzman – saw second quarter revenue (ending 29 December 2018) reach US$1.8 billion, flat versus the same period in 2017 (see table below).
The quarter saw the pace of growth slow drastically from the 4% in the six months to December, when sales hit US$3.19 billion.
Tapestry CEO Victor Luis said that second quarter results “fell short of our expectations in the face of an increasingly volatile macroeconomic and geopolitical backdrop”. The market reacted by sending Tapestry’s share price falling from last week’s high of more than US$39 to just under US$35 this week.
At Coach, which accounts for about 72% of total revenue, the company delivered continued growth driven by positive global comparable store sales. Luis said: “We drove outperformance in our international markets and across our e-commerce platforms.”
Coach remains heavily focused on North America with more than half of its sales coming from the region. However, in December, the brand – well-known in travel retail – held its first ever runway show in Shanghai, garnering over one billion impressions.
“We were especially excited by the brand’s increased traction with Chinese consumers globally driven by domestic demand, partially offset by a decline in tourist spend. Moving forward, we’re focused on providing a heightened level of newness throughout the pyramid of fashion, price and occasion, supported by marketing messages that surprise and delight,” noted Luis.
Recently-acquired Kate Spade – also expanding in travel retail – makes up about 22% of revenue. The brand generated second quarter comparable store sales below company expectations “impacted by the lack of distinctive newness in the final collections from the prior design team” said Luis.
On a positive note, he added: “As we’ve entered the second half of the fiscal year, we are delighted to have just launched Nicola Glass’s inaugural collection in our full-price channels globally where initial reads have been strong, underscoring our confidence in achieving a significant inflection in the business with a return to positive comps.”
Luis noted: “Importantly, we generated meaningful synergies from the integration of Kate Spade, and made material systems and strategic brand investments across our portfolio.”
Across all its brands, Tapestry says it will continue to stick to its strategic priority of “maximising the opportunity with Chinese consumers globally”.