The U.S.-based parent companies of Jimmy Choo and Stuart Weitzman have set out to become major luxury goods conglomerates like LVMH or Kering, but they have continued to disappoint investors with their latest quarterly results.
Tapestry, where Victor Luis resigned as chief executive a few weeks ago, said it has decided to review its business to improve organic growth and profitability, using data and technology to increase productivity and speed-to-market, after publishing its results for the first quarter of the current financial year, ended on Sept. 28.
Tapestry's main footwear brand, Stuart Weitzman, saw decreases in sales of 9 percent on a reported basis and of 8 percent in constant currencies, down to $87 million, in the first quarter. The gross margin improved by 2.3 percentage points to 52.5 percent for this brand, but it incurred an operating loss of $19 million for the period, up from a loss of $18 million in the year-ago quarter.
Net sales at Kate Spade, which Tapestry acquired in 2017, fell by 6 percent to $306 million from $325 million in the previous year. At Tapestry's older and bigger brand, Coach, sales went up by 1 percent to $966 million, with global comparable store sales up by 1 percent, due essentially to an increase in global e-commerce.
Overall, the group's net sales declined by 2 percent on a reported basis and by 1 percent in constant currencies to $1.36 billion in the quarter. Net income shrank to $20 million from $122 million.
Capri Holdings increased its revenues by 15.1 percent to $1.442 billion in the second quarter, with an increase in constant currencies of 16.1 percent, largely due to its acquisition of the Italian fashion house of Versace last year. The group's adjusted net income declined to $177 million from $192 million.
Versace generated an operating margin of 3.9 percent on sales of $228 million. Meanwhile, Jimmy Choo recorded a 7.8 percent increase in revenues to $125 million for the quarter. The brand posted a negative operating margin of 8.0 percent for the quarter, up from a negative margin of 7.8 percent in the year-ago period.
In constant currencies, the brand's revenues increased by 9.5 percent. Comparable-store sales declined by the mid-single digits, because of weak performance in Hong Kong and a decline in Japan. Without those two regions, they would have been flat.
For the third quarter, Jimmy Choo expects to achieve revenues of about $165 million. Comparable-store sales will remain flat in the next quarter compared with the prior year and the operating margin should return to positive territory in a reflection of normal seasonality.