Tapestry Reports 5.3% Sales Increase to $2.20 Billion in Q2 Fiscal 2025

Tapestry, Inc. reported its financial results for the second quarter and first six months of fiscal 2025, revealing a net sales increase of 5.3% to $2.20 billion compared to $2.08 billion in the same period last year. The company's gross profit rose by 9.4% to $1.63 billion, resulting in a gross margin of 74.4%, up from 71.6%. Operating income also improved, reaching $492.8 million, a 10.1% increase from $447.6 million in the prior year. However, net income decreased slightly by 3.7% to $310.4 million, primarily due to a $120.1 million loss on extinguishment of debt related to the terminated acquisition of Capri Holdings Limited.

In terms of segment performance, Coach brand sales increased by 10.9% to $1.71 billion, driven by strong direct-to-consumer (DTC) sales, particularly in North America and Europe. Conversely, Kate Spade and Stuart Weitzman experienced declines in sales, with Kate Spade down 9.6% to $416.4 million and Stuart Weitzman down 15.2% to $69.7 million. The overall increase in sales was attributed to improved pricing strategies and a recovery in consumer demand, despite challenges posed by macroeconomic conditions.

Tapestry's balance sheet showed a significant reduction in cash and cash equivalents, which fell to $983.4 million from $6.14 billion at the end of the previous fiscal year. This decline was largely due to substantial debt repayments totaling $6.86 billion, primarily related to the Capri acquisition financing. The company also initiated a $2 billion share repurchase program, with $1.6 billion already executed through accelerated share repurchase agreements.

Looking ahead, Tapestry remains focused on its 2025 growth strategy, which emphasizes building customer relationships, driving product innovation, and expanding its global presence. The company plans to leverage its strengths in e-commerce and retail to enhance customer engagement and capture market share in under-penetrated regions. However, Tapestry acknowledges ongoing risks from economic volatility, currency fluctuations, and geopolitical tensions that could impact its performance.

Overall, Tapestry's financial results reflect a mixed performance, with strong sales growth in its Coach brand offset by declines in other segments, alongside significant strategic shifts following the termination of the Capri acquisition. The company is positioned to navigate the current economic landscape while pursuing its long-term growth objectives.