Tapestry CEO: ‘We’re a different company’ from 18 months ago

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Diving brief:

  • Tapestry, parent company of Coach, Kate Spade and Stuart Weitzman, reported second-quarter net revenue of $2.1 billion on Thursday, a 27% year-over-year increase, according to a company press release.
  • Revenues were up 18% from pre-pandemic levels, driven primarily by the Kate Spade and Coach brands.
  • As a result, the company has raised its guidance for fiscal 2022, forecasting revenue of $6.75 billion, representing nearly 20% year-over-year growth. This “would mark an all-time high in sales for the business,” the conglomerate said.

Overview of the dive:

“We’re a different company than we were just 18 months ago,” the Tapestry CEO said. Joanne Crevoiserat said in a press release regarding the company’s performance in the second quarter.

During this period, in August 2020, Tapestry was reassessing its store footprint, reducing company labor costs by 20%, dealing with declining revenue and facing losses, recording an operating loss of approximately $280 million.

Fast forward a year and a half, and Crevoiserat is now pointing to “record sales” during the holiday quarter, driven by Kate Spade and Coach. Stuart Weitzman has returned to pre-pandemic income levels.

By brand, Coach’s net sales increased 24% to $1.5 billion, achieving its highest quarter of revenue and profitability in nearly 10 years. Kate Spade posted 33% growth to $500 million and Stuart Wetizman reported a 37% year-over-year increase to $115.8 million.

The Coach brand in particular was “above our expectations and reflected the continued momentum,” Roxanne Meyer, managing director of MKM Partners, wrote in emailed comments. But the brand’s operating profit of $473.3 million was “a bit below our expectations,” according to Meyer.

Tapestry also highlighted the acceleration of its digital channels, which grew 30% year-over-year and nearly tripled from pre-pandemic levels. The company has invested in this area, particularly in talent, to boost the customer experience and promote conversion.

Still, Tapestry isn’t fully omnichannel, according to analysts at Jane Hali & Associates. The brands offer online shopping, in-store pickup, and curbside options, but “do not offer ship-from-store or mobile shopping apps,” analysts wrote in comments by email.

By product category among the Tapestry brands, women’s handbags generated 52% of sales, followed by women’s accessories (18%), footwear and lifestyle (17%) and men’s ( 13%). North America accounted for the majority of sales, and direct-to-consumer sales accounted for 90% of the company’s revenue.

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