Tapestry Records $855M Kate Spade Impairment Amid Revival Struggles

Tapestry Inc. has taken an $855 million impairment charge on the Kate Spade brand, signaling continued struggles in its attempts to revitalize the label since its 2017 acquisition for $2.4 billion. The write-down, disclosed in late August 2025, reflects declining current and projected cash flows, as well as ongoing investments aimed at rejuvenating the brand [1]. Despite its iconic status for quirky handbags and accessories, Kate Spade has failed to meet performance expectations, with sales falling 10% in the previous year and remaining below their peak in 2022 when they neared $1.5 billion [1].

The challenges with Kate Spade highlight the risks associated with M&A in the fashion industry, particularly when integrating brands with distinct identities and consumer bases. Tapestry had previously attempted to expand its portfolio through a high-profile $8.5 billion deal to acquire Capri Holdings, which owns Michael Kors, Jimmy Choo, and formerly Versace. That effort, however, was blocked in 2024 by the U.S. Federal Trade Commission, which argued the merger would reduce competition in the handbag sector [1].

Tapestry’s CEO and CFO have acknowledged the difficulties in turning around the Kate Spade brand, citing poor execution over the past several years. “We know there’s great demand for the brand, but we haven’t executed well,” said Scott Roe, Tapestry’s CFO [1]. Despite these missteps, Tapestry has seen a successful resurgence of its Coach brand, which now accounts for nearly 80% of the company’s sales. Coach’s revival, driven by direct-to-consumer sales, data-driven product strategies, and a more contemporary aesthetic, has helped offset the underperformance of Kate Spade [1].

The broader fashion landscape remains volatile, with shifting consumer preferences and a growing emphasis on digital engagement and brand storytelling. Tapestry’s experience with Kate Spade serves as a cautionary tale for other fashion conglomerates pursuing growth through acquisition. Analysts note that achieving cross-brand synergies in the luxury and lifestyle sectors is increasingly difficult, especially when brands are acquired at premium prices and expected to deliver consistent returns [1].

With the Stuart Weitzman brand already divested and Kate Spade continuing to lag, Tapestry’s current strategy hinges largely on the sustained success of Coach. While the brand has successfully captured younger consumers—particularly Gen Z and millennials—its ability to replicate that success across its portfolio remains uncertain. The recent impairment charge, along with regulatory headwinds and tariff-related costs, has led to a drop in Tapestry’s share price, underscoring investor concerns about the company’s long-term growth prospects [1].

Source: [1] Tapestry takes an $855 million write down on Kate Spade ... (https://fortune.com/2025/08/14/tapestry-write-down-kate-spade-coach-strategy-stock-outlook/)