Tapestry Inc posted earnings that topped analysts’ estimates even amid a sharp sales decline at its Kate Spade brand, which has struggled to rebound after a period of heavy discounting and flash sales.
Excluding some items, profit of 40 cents a share topped projections of 36 cents. The Coach brand, which accounts for more than two-thirds of Tapestry revenue, reported comparable sales growth of 1%, matching estimates, while Kate Spade’s same-store sales tumbled 16%, a little less than predicted.
The Kate Spade results aren’t a welcoming start for new Tapestry CEO Jide Zeitlin, who stepped into the role in September. Zeitlin, a Goldman Sachs Group veteran who has served as Tapestry’s chairman since 2014, said the decline reflects “product and merchandising challenges” for the brand.
The ailing Kate Spade line has been a source of investor concern since it was acquired for $2.4 billion in 2017 under previous CEO Victor Luis.