Dive Brief:
- Tapestry, parent company of Coach, Kate Spade and Stuart Weitzman, on Thursday reported second quarter net sales of $2.1 billion, a 27% increase year over year, according to a company press release.
- Revenue increased 18% compared to pre-pandemic levels, primarily driven by the Kate Spade and Coach brands.
- As a result, the company increased guidance for fiscal 2022, forecasting revenue of $6.75 billion, representing nearly 20% year-over-year growth. It would “mark a record level of sales for the company,” the conglomerate said.
Dive Insight:
“We are a different company than we were just 18 months ago,” Tapestry CEO Joanne Crevoiserat said in a statement regarding the company’s Q2 performance.
During that time period, back in August 2020, Tapestry was reevaluating its store footprint, slashing corporate workforce costs by 20%, dealing with falling revenues and facing losses, reporting an operating loss of about $280 million.
Fast forward a year and a half, and Crevoiserat now points to “record sales” during the holiday quarter, driven by Kate Spade and Coach. Stuart Weitzman returned to pre-pandemic revenue levels.
By brand, Coach net sales increased 24% to $1.5 billion, delivering its highest quarter of revenue and profitability in nearly 10 years. Kate Spade saw 33% growth to $500 million and Stuart Wetizman reported a 37% increase year over year to $115.8 million.
The Coach brand in particular was “above our expectations and reflecting ongoing momentum,” Roxanne Meyer, managing director of MKM Partners, wrote in emailed comments. But, operating income at the brand, which was $473.3 million, was “a tad below our expectations,” according to Meyer.
Tapestry also pointed to acceleration in its digital channels, which increased 30% year over year and almost tripled compared to pre-pandemic levels. The company made investments in this area, particularly with talent, to boost customer experience and drive conversion.
Yet, Tapestry is not fully omnichannel, according to analysts at Jane Hali & Associates. The brands offer buy online, pick up in store and curbside options, but “do not offer ship from store or have mobile shopping apps,” the analysts wrote in emailed comments.
By product category across Tapestry brands, women’s handbags delivered 52% of revenue, followed by women’s accessories (18%), footwear and lifestyle (17%) and men’s (13%). North America accounted for most of sales, and direct to consumer made up 90% of the company’s revenue.
