Coach brand and sales growth in Europe Tapestry (TPR.US) raises full-year guidance

Luxury brand Coach's parent Tapestry (TPR.US) reported its fiscal 2025 first-quarter results, which ended on September 28, 2024. The results showed that Tapestry's Q1 net sales were US$1.51 billion, flat year-on-year; net profit was US$187 million, down from US$195 million in the same period last year; and diluted EPS was US$0.79, down from US$0.84 in the same period last year.By brand, Coach's net sales were US$1.17 billion, up 2% year-on-year (YoY) (at constant exchange rates, hereinafter the same); Kate Spade's net sales were US$283 million, down 6% YoY; and Stuart Weitzman's net sales were US$53.7 million, up 2% YoY.By region, North America's net sales were US$948 million, down 1% YoY; China's net sales were US$234 million, down 5% YoY; Japan's net sales were US$117 million, down 4% YoY; and Europe's net sales were US$94.3 million, up 27% YoY.Looking ahead, Tapestry expects its full-year revenue in 2025 to exceed US$6.75 billion, meaning a 2% increase, compared with its previous expectation of a 1% increase; and expects diluted EPS to be between US$4.50 and US$4.55, compared with its previous expectation of US$4.45-US$4.50.It is worth noting that Tapestry's plan to acquire Capri Holdings (CPRI.US), a US luxury fashion group, for US$8.5 billion was blocked by a US federal court last month. Tapestry said it would appeal against the decision, but Wall Street believes the acquisition may be doomed.At present, Tapestry's executives must convince investors that they have a reliable plan to continue increasing the company's revenue in the next few years, even without adding new brands. Investors seem interested in this idea, as Tapestry's stock price surged after the US federal court blocked the acquisition of Capri. For Tapestry, the longer the Capri deal drags on, the greater the financial and management challenges it faces, and it also distracts Tapestry's successful efforts to enhance the reputation and profitability of its Coach brand.In addition, Tapestry did not mention the resumption of its stock buyback plan, which it suspended after it proposed the acquisition of Capri last year. Many Wall Street analysts expect the company to eventually use the funds raised for the acquisition of Capri to repurchase some shares.Moreover, Tapestry expects its full-year revenue in 2025 to exceed US$6.75 billion, meaning a 2% increase, compared with its previous expectation of a 1% increase; and expects diluted EPS to be between US$4.50 and US$4.55, compared with its previous expectation of US$4.45-US$4.50.