Tapestry Reports 45.9% Increase in Q3 Net Income, Plans Stuart Weitzman Divestiture

Tapestry, Inc. reported its financial results for the third quarter and first nine months of fiscal 2025, revealing a net income of $203.3 million for the quarter, a 45.9% increase from $139.4 million in the same period last year. For the nine months ended March 29, 2025, net income rose to $700.3 million, up 6.6% from $656.7 million in the prior year. The company’s net sales for the third quarter reached $1.58 billion, a 6.9% increase compared to $1.48 billion in the third quarter of fiscal 2024, while year-to-date sales totaled $5.29 billion, reflecting a 4.1% increase from $5.08 billion.

The company experienced significant changes in its financial performance compared to the previous fiscal period. Gross profit for the third quarter increased by 8.9% to $1.21 billion, with a gross margin of 76.1%, up from 74.7% a year earlier. Selling, general, and administrative (SG&A) expenses also rose, totaling $952.1 million for the quarter, but as a percentage of net sales, they decreased to 60.1% from 60.9%. The operating income for the quarter was $253.7 million, a 24.2% increase from $204.3 million in the prior year.

Strategically, Tapestry announced plans to divest its Stuart Weitzman business, entering into a purchase agreement with Caleres, Inc. for $105 million, expected to close in summer 2025. This decision is part of Tapestry's broader strategy to streamline operations and focus on its core brands, Coach and Kate Spade. The company also faced challenges related to the terminated merger agreement with Capri Holdings, which resulted in significant costs, including a $120.1 million loss on extinguishment of debt.

Operationally, Tapestry's Coach brand saw a notable increase in net sales, rising 12.9% to $1.29 billion in the third quarter, driven by strong direct-to-consumer sales. In contrast, Kate Spade and Stuart Weitzman reported declines in sales, with Kate Spade's sales down 12.7% and Stuart Weitzman's down 17.7%. The company’s total employee headcount and customer engagement metrics were not disclosed in the filing, but the company continues to focus on enhancing customer relationships and expanding its global presence, particularly in North America and China.

Looking ahead, Tapestry remains cautious about the macroeconomic environment, including potential impacts from international trade disputes and currency fluctuations. The company is committed to its 2025 growth strategy, which emphasizes building lasting customer relationships, fueling product innovation, and delivering compelling omni-channel experiences. Tapestry's management believes that its current liquidity position, bolstered by cash flows from operations and access to credit facilities, will support its operational and capital needs moving forward.