Tapestry's Mixed Results: Sales Drop, FTC Challenges Acquisition
Tapestry Inc., the parent company of luxury brands like Coach, Kate Spade, and Stuart Weitzman, has faced mixed results in recent quarters. While the company's earnings have beaten expectations, its sales have shown declines, particularly for Stuart Weitzman. Meanwhile, Tapestry's proposed acquisition of Capri Holdings, which owns brands like Versace and Michael Kors, has drawn scrutiny from the Federal Trade Commission (FTC).
In the third quarter, Tapestry's unaudited net sales were $1.48 billion, a 2% decrease year over year. Despite this, the company's earnings surpassed expectations. However, the sales decline was driven by low double-digit drops in both Kate Spade and Stuart Weitzman, with the trend continuing into the first half of 2024. Stuart Weitzman's results were particularly pressured by headwinds in North America and Greater China. Coach's sales remained flat, while Kate Spade saw a 6% drop and Stuart Weitzman fell by 18% in the same quarter.
Tapestry's CEO, Joanne Crevoiserat, expressed confidence in the merger's legal arguments and plans to close the transaction in 2024. If completed, the merger would create the fourth largest luxury house in the world. However, the FTC filed a lawsuit in April to block the acquisition, arguing it would eliminate direct head-to-head competition and give Tapestry a dominant share of the accessible luxury handbag market. As of October 2023, there are no specific details about this lawsuit, and it's possible that more information may emerge later or that current reports are inaccurate.
Tapestry has revised its 2024 outlook to project revenue of over $6.6 billion, approximately in line with the prior year. Despite recent sales declines, the company remains optimistic about its future. However, the outcome of the FTC's lawsuit will significantly impact Tapestry's plans for growth and dominance in the luxury market. For the latest and most accurate information, it's recommended to consult official news sources and press releases from the involved companies and the FTC.
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