U.S. luxury giants Tapestry and Capri Holdings have announced their respective sales updates for the quarter, with the two New York firms hit by a slowdown in luxury spending globally.
For the first quarter, Tapestry, the owner of Coach, Kate Spade, and Stuart Weitzman, said revenues totalled USD 1.5 billion, flat on last year, with international revenues up 7% at constant currency, helped by gains of 12 percent in Japan and 9 percent in Greater China.
By brand, Coach sales lifted 3 percent to USD 1.2 billion, partially offset by a 6 percent decline to USD 303.3 million at Kate Spade and a 19 percent plummet at footwear brand Stuart Weitzman, which clocked just USD 52.6 million during the quarter.
The company posted net income for the three months of USD 195.3 million, flat on the same period last year.
“We achieved record first quarter revenue and EPS as we continued to successfully advance our strategic growth agenda against a dynamic external backdrop,” said Joanne Crevoiserat, chief executive officer of Tapestry, Inc.
“Our strong and consistent results demonstrate the power of brand building and customer centricity, underpinned by the creativity of our talented global teams and disciplined execution. During the quarter, we drove revenue gains at constant currency, significant gross margin expansion, and high-teens adjusted EPS growth. Importantly, we continued to invest in our brands and consumer engagement platform, reinforcing our commitment to driving innovation and cultivating lasting relationships with customers around the world.”
Capri Holdings, parent company of Versace, Michael Kors and Jimmy Choo, said revenues for the second quarter fell 8.6 percent to USD 1.29 billion, on the back of high single-digit declines across all its portfolio.
By brand, Versace revenue fell 9.1 percent to USD 280 million, while Jimmy Choo revenue dipped 7 percent to USD 132 million. Likewise, Michael Kors revenues decreased 8.6 percent to USD 879 million, hindered by the delayed implementation of the brand’s Americas e-commerce site.
In Asia, Versace sales increased 1.7 percent, but fell 11.9 percent at Jimmy Choo, and were down 1.9 percent at Michael Kors.
As a result of the slowdown in sales, Capri’s net income was slashed to USD 90 million, or USD 0.77 per diluted share, compared to USD 224 million, or USD 1.63 per diluted share, in the prior year.
“Capri Holdings’ second quarter results were below our expectations due to macro-economic headwinds as well as e-commerce implementation related challenges. In early July, we implemented a new e-commerce platform for Michael Kors in the Americas,” said John D. Idol, the Capri Holdings chairman and chief executive officer.
“While we are excited about the long-term benefits, the transition negatively impacted our second quarter results. Additionally, during the quarter consumer demand for fashion luxury goods softened primarily in the Americas.”
The earnings updates come just three months after the duo announced that Tapestry announced its intention to purchase rival Capri Holding, in a deal that valued Capri at close to USD 9 billion.
Once completed, the newly established company boasts some USD 12 billion in global annual sales, a figure that could be challenged if the slowdown in luxury sales across the globe continues to take effect for the remainder of fiscal 2024.