Kate Spade Drives Standout Earnings at Tapestry, but Stuart Weitzman Struggles
Tapestry Inc. continues to make strides toward becoming America’s foremost fashion empire — and a turnaround at its Kate Spade brand is helping it get there.
The company, which also owns Coach and Stuart Weitzman, reported earnings Tuesday morning, topping Wall Street’s expectations with earnings per diluted share of $0.60, versus the $0.57 estimate.
CEO Victor Luis credited the strength of the fiscal fourth-quarter and full-year results to the acquisition of Kate Spade, a $2.4 billion deal that closed in July 2017. While the brand’s same-store sales fell during the quarter, they surpassed analyst expectations, sinking 3 percent rather than the expected 7.2 percent drop, a hopeful sign of recovery for the beloved brand.
“Fiscal 2019 will be a pivotal year at Kate Spade as we evolve the brand,” said Luis in a statement. “We will focus on global expansion, notably in China where the brand is nascent and we see boundless opportunity.
Michael Kors alum Anna Bakst joined the brand as CEO in March, and her early efforts appear to be paying off. Longtime creative director Deborah Lloyd was succeeded by Nicola Glass in January of this year and will unveil her first collection for the house in September.
The death of the label’s namesake founder rocked the industry in June, and while the designer exited the company over a decade ago, analysts say the news may have brought some nostalgia-driven shoppers back into stores.
Tapestry’s overall sales for the quarter grew 31 percent over the same period last year, reaching $1.48 billion, compared with $1.01 billion in 2017. Revenues at Coach, the company’s biggest brand, accounted for $1.1 billion of the quarter’s total, and the label reported annual revenues of $4.22 billion, compared with $4.11 billion the year prior.
The one weak spot in Tapestry’s results again lay with Stuart Weitzman, which has waylaid by delivery delays and executive shake-ups. While while former Ferragamo chief Eraldo Poletto joined the company in April, he had his hands full early on, as creative director Giovanni Morelli left the company a month later amid accusations of misconduct.
Tapestry shares were up more than 11 percent as of 10:30 a.m. ET.
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