Luxury brands diverge: Tapestry stock rises while Capri slides after earnings

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Kate Spade owner Tapestry beat analyst expectations Thursday and raised its annual profit forecast, a day after Capri's disappointing third quarter earnings.

Tapestry's gains, sending the stock up over 3% Thursday, came a day afterreport. Capri shares fell more than 25% over the past two days after it lowered its fiscal fourth quarter and fiscal 2024 outlook, and it missed estimates across revenues, EPS and margins.

Tapestry has spent years retooling its brands and making them relevant for Gen Z and millennial consumers, said Ian Schatzberg, CEO and co-founder of brand agency General Idea, who has worked with Capri and Tapestry. Tapestry reported per-share earnings of $1.36 on Thursday, topping estimates of $1.27, according to a survey of analysts conducted by Refinitiv. Tapestry beat EPS estimates three times in the last four quarters.

Patel said the "primary culprit" of Capri's shortfall was a decline in wholesale business — which has been weak across the board for global brands due to inventory challenges. Schatzberg said a crucial component of Tapestry's success has been its emphasis on creating stories and narratives around its products. He anticipates fierce competition among accessible luxury companies over the next few years to pin down brand marketing and attract younger audiences.

 

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