In the midst of a challenging earnings season for luxury brands, Tapestry (TPR, Financial), the parent company of Coach, has demonstrated a relatively strong performance. For the first quarter of its fiscal year 2025, ending September 28, 2024, Tapestry reported net sales of $1.51 billion, remaining stable compared to the previous year. However, net profit dropped by 4.1% to $187 million. Despite this, the Coach brand itself showed resilience with a 2% increase in sales, reaching $1.71 billion. The Greater China region contributed 18% to the revenues, with strong performance praised by Coach's China President, Liliana Lucioni.
Regionally, North American sales saw a slight decline of 1% to $948 million, while the Greater China sales fell by 5% to $234 million. Japanese sales decreased by 4% to $117 million, whereas the European market grew significantly by 27% to $94.3 million. By brand, Coach's sales growth stood out at 2%, with Kate Spade experiencing a 6% decline to $283 million, and Stuart Weitzman seeing a 2% rise to $53.7 million.
In contrast, Richemont and Kering, two other luxury giants, reported disappointing results. Richemont's revenue fell by 1% to €10.08 billion, with profits plunging by 70% to €457 million, strongly affected by a 27% drop in the Chinese market. Kering's third-quarter revenues shrank by 15% to €3.79 billion, with the Asia-Pacific market seeing a dramatic 30% decrease. Tapestry's relatively stable results are largely attributed to Coach's growth and strategic innovations in product and customer experience.
Following this quarter's performance, Tapestry has revised its fiscal year 2025 earnings forecast upwards, anticipating a 2% increase in annual revenue to over $6.75 billion, exceeding the prior expectation of 1% growth. Interestingly, the recent $8.5 billion acquisition attempt of Capri by Tapestry was blocked by a U.S. federal court, and though Tapestry plans to appeal, market sentiment suggests the deal may fail. Tapestry's stock rose following the court's decision, while Capri's stock fell substantially, reflecting market sentiment against the acquisition.
Coach is expected to play a key role in telling Tapestry's growth story. In the full fiscal year 2024, Coach achieved sales of $5.1 billion across 60 countries, with a notable presence in North America and a growing contribution from Greater China, which now stands at 18%. Despite a 5% decline in Tapestry's Greater China sales this quarter, Coach's performance in the region was positive, driven largely by its popular Tabby handbag collection. At a recent expo, Coach launched a new collection, the Quilted Chain Tabby, underscoring its innovative approach to product offerings.
Coach aims to engage more with younger consumers through various initiatives, including opening cafes and launching the "Young Artist Program" in China. These efforts have attracted a significant number of new customers, particularly from Generation Z and Millennials, demonstrating Coach's strategy to remain relevant and appealing to the younger demographic.
