In the wake of its failed merger with Capri Holdings, Coach parent company Tapestry is following through with its plan to “move with speed and boldness to accelerate growth for our organic business,” as Tapestry CEO Joanne Crevoiserat put it last November.
Toward that end, Tapestry is selling off one of its weaker brands, luxury footwear label Stuart Weitzman. Famous Footwear and Sam Edelman parent company Caleres has picked up the brand for $105 million in cash in a deal that is expected to close this summer, subject to customary closing conditions.
Tapestry Marks Strong Holiday as Capri Struggles
Since ending its planned merger with fellow American luxury house Capri in November following regulatory pushback, Tapestry has recorded strong performance, in contrast with Capri, which saw double-digit declines at its biggest brands, Versace and Michael Kors, during the recent holiday period.
For the three-month period ended Dec. 28 (the company’s fiscal Q2), Tapestry reported $2.2 billion in revenue and also raised its full-year outlook to $6.85 billion, which would be a 3% increase from the prior year. However, Coach is clearly driving this growth; Q2 revenues for Coach were up 11% YoY in Q2, while both Kate Spade and Stuart Weitzman reported declines of 10% and 15%, respectively.
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“As diligent stewards of our portfolio and disciplined allocators of capital, this transaction ensures that all our brands are positioned for long-term success and that we maintain a sharp focus on our largest value creation opportunities,” said Crevoiserat in a statement. “At Tapestry, this means harnessing our position of strength to sustain Coach’s leadership and momentum while reinvigorating Kate Spade to drive durable organic growth and shareholder value. At the same time, we are pleased that we found Stuart Weitzman a home in Caleres — an ideal owner to guide its next chapter of growth.”
Caleres Expects Stuart Weitzman to be Profitable from the Get-Go
Stuart Weitzman will now join a collection of other footwear brands under the Caleres umbrella, which, in addition to Famous Footwear and Sam Edelman, also includes Allen Edmonds, Naturalizer and Vionic. Caleres operates 1,000 of its own stores, and its brands also are sold at department and specialty stores across the country as well as across 15 ecommerce sites.
“I have long admired Stuart Weitzman for the brand’s pivotal role in shaping the footwear industry,” said Jay Schmidt, President and CEO of Caleres in a statement. “As we bring this iconic brand into the Caleres portfolio, we are committed to preserving its legacy of craftsmanship, quality and fit while driving it forward. The acquisition of Stuart Weitzman advances our strategic agenda to grow our brand portfolio segment with more global and direct-to-consumer reach.
“Stuart Weitzman will be a lead brand for Caleres, and with this combination the brand portfolio segment will generate nearly half of our total revenue and will continue to generate over half of our operating profit,” Schmidt added. “We will leverage our demonstrated, best-in-class footwear capabilities while pursuing category and channel growth. We expect to operate the brand profitably post integration and I look forward to partnering with both the Tapestry and Stuart Weitzman teams for a seamless and successful transition.”
