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The American groups Tapestry and Capri Holdings<\/strong><\/b>, which are likely to merge, are not in the same frame of mind…<\/p>\n <\/p>\n Tapestry<\/strong><\/b>, owner of Coach, Kate Spade and Stuart Weitzman<\/strong><\/b>, closed its 2023-2024 financial year<\/strong><\/b> on June 29. On the other hand, Capri Holdings Limited (Versace, Jimmy Choo and Michael Kors), which the former wishes to acquire,<\/strong><\/b> published unsatisfactory results for its first quarter<\/strong><\/b> of fiscal 2024-2025, also closed on June 29, 2024.<\/p>\n <\/p>\n However, the two companies are still hoping to create a luxury goods giant across the Atlantic<\/strong><\/b>, despite opposition from the American competition authorities. When Tapestry announced its intention to acquire Capri Holdings last year, the FTC, the market watchdog, immediately voiced its opposition to<\/strong><\/b> the merger through legal action.<\/p>\n <\/p>\n <\/p>\n In mid-August, Tapestry<\/strong><\/b> reported sales growth of 1%<\/strong><\/b> at constant exchange rates to $6.67 billion (\u20ac6 billion). With fourth-quarter revenues of $1.59 billion, the group pleasantly surprised analysts<\/strong><\/b>, who were expecting $1.57 billion instead.<\/p>\n <\/p>\n However, net income fell<\/strong><\/b> to $816 million from $936 million the previous year. But that didn’t stop Tapestry from posting record fourth-quarter earnings per share<\/strong><\/b> of 92 cents, instead of the 88 cents expected.<\/p>\n <\/p>\n Over the full year, however, trends differed according to brand and region<\/strong><\/b>. Buoyed by sales of its Tabby handbags, leather goods retailer Coach reported slight growth<\/strong><\/b>, while Stuart Weitzman posted a sharp decline.<\/strong><\/b> To remedy this situation, the luxury women’s footwear brand is looking to broaden its offer with less formal items.<\/p>\n <\/p>\n Kate Spade<\/strong><\/b>, for its part, increased profits<\/strong><\/b> despite market difficulties by focusing on optimizing expenses and gross margins.<\/p>\n <\/p>\n Geographically, sales were down in North America (-1%) and Japan, but up in Europe<\/strong><\/b>.<\/p>\n <\/p>\n <\/p>\n Another source of satisfaction for Tapestry: itse-commerce<\/strong><\/b> business continued to grow, now accounting for 30% of total sales.<\/strong><\/b><\/p>\n <\/p>\n For the current fiscal year (2024-2025), the group forecasts a 1% increase at constant exchange rates<\/strong><\/b> to around $6.7 billion. It expects sales to hold steady in North America, Greater China and Japan<\/strong><\/b>, but to rise in Europe and other Asian countries.<\/strong><\/b><\/p>\n <\/p>\n He is targeting a 50 basis point increase in operating margin<\/strong><\/b> and a 40 basis point increase in gross margin.<\/p>\n <\/p>\n Tapestry also plans to earmark around $190 million<\/strong><\/b> in capital expenditure and IT costs for the cloud.<\/p>\n <\/p>\n <\/p>\n Above all, Tapestry hopes to conclude its takeover of Capri Holdings before the end of calendar 2024<\/strong><\/b>, despite opposition from the FTC and its target’s recent less-than-stellar results.<\/p>\n <\/p>\n In the first quarter of 2024-2025, ended June 29, Capri Holdings sales fell by 13.2%<\/strong><\/b> (-12.1% at constant exchange rates) to $1 billion. Above all, the Group posted a net loss of $14 million<\/strong><\/b>, compared with a net profit of $48 million last year!<\/p>\n <\/p>\n All the Group’s brands were on a slippery slope<\/strong><\/b> worldwide, except for Jimmy Choo in the Americas (+6%).<\/p>\n <\/p>\n Michael Kors sales fell by 14.2%<\/strong><\/b> on a reported basis (-13.3% at constant exchange rates) to $675 million, and Versace<\/strong><\/b> sales by 15.4%<\/strong><\/b> on a reported basis (14.3% at constant exchange rates) to $219 million. The Group attributes this downturn \u201cmainly to the decline in global demand for fashion and luxury products\u201d.<\/strong><\/b><\/p>\n <\/p>\n Jimmy Choo sales were down \u201conly\u201d 5.5%<\/strong><\/b> on a reported basis (-3.8% at constant exchange rates) to $173 million.<\/p>\n <\/p>\n <\/p>\n Versace posted an<\/strong><\/b> operating loss of $17 million<\/strong><\/b>, compared with an operating profit of $3 million the previous year. The group attributes this \u201cprimarily to lower full-price sales\u201d.<\/p>\n <\/p>\n Operating profits for Michael Kors and Jimmy Choo, meanwhile, contracted sharply<\/strong><\/b> to $75 million from $130 million the previous year for the former, and $4 million from $16 million for the latter.<\/p>\n <\/p>\n Overall, we were disappointed with our first-quarter results<\/strong><\/b>, as performance continued to be affected by the slowdown in global demand for fashion and luxury goods,\u201d admitted John D. Idol, the company’s CEO.<\/strong><\/b><\/p>\n <\/p>\n <\/p>\n The executive remained committed to joining Tapestry<\/strong><\/b> and helping it make its case in court against the FTC.\u201d As previously stated, Capri intends to vigorously defend this case alongside Tapestry, and we look forward to completing the pending acquisition. This combination will bring value to our shareholders and new opportunities to our dedicated employees around the world<\/strong><\/b>, as Capri Holdings becomes part of a larger, more diversified company. By partnering with Tapestry, our brands will have enhanced resources and capabilities to accelerate the expansion of their global reach while preserving their unique DNA.\u201d<\/p>\n <\/p>\n Meanwhile, Capri Holdings is focused on \u201cmanaging\u201d its \u201coperating expenses and inventory levels prudently, given the challenging global retail environment\u201d continued the CEO. \u201cLooking ahead, we remain focused on implementing our strategic initiatives to ensure long-term sustainable growth<\/strong><\/b> in each of our luxury houses.\u201d<\/p>\n <\/p>\n <\/span><\/p>\n <\/span><\/p>\n \t\tRecord profits<\/h2>\n
E-commerce: almost a third of sales<\/h2>\n\n
Acquisition of Capri Holdings still on the agenda<\/h2>\n
Results at half-mast<\/h2>\n
On Tapestry’s side against the FTC<\/h2>\n