Tapestry, Inc. reported its financial results for the first quarter of fiscal 2025, ending September 28, 2024, showing a slight decline in net sales and net income compared to the same period in the previous fiscal year. Net sales totaled $1,507.5 million, a decrease of $5.7 million (0.4%) from $1,513.2 million in the first quarter of fiscal 2024. The decline was attributed to currency fluctuations, although net sales remained stable when excluding these effects. The Coach brand saw a 1.1% increase in net sales to $1,170.6 million, driven by a rise in direct-to-consumer sales, while Kate Spade's sales fell by 6.6% to $283.2 million due to lower store performance and e-commerce sales.
Gross profit for the quarter increased by 3.4% to $1,134.9 million, improving the gross margin to 75.3% from 72.5% in the prior year. Operating income slightly decreased to $252.0 million, maintaining an operating margin of 16.7%. Net income was reported at $186.6 million, down from $195.0 million, with basic earnings per share decreasing to $0.81 from $0.85.
The company incurred significant acquisition-related costs of $70.8 million in the quarter, primarily for the ongoing acquisition of Capri Holdings Limited, which is valued at approximately $8.50 billion. The acquisition has faced regulatory scrutiny, with the FTC filing a complaint to block the merger, leading to a preliminary injunction granted on October 24, 2024. Tapestry and Capri have filed an appeal against this decision.
Tapestry's financial position remains strong, with cash and cash equivalents increasing to $6,462.9 million from $6,142.0 million as of June 29, 2024. Total current assets rose to $9,145.5 million, while total liabilities increased to $1,853.8 million. Long-term debt also saw a rise to $7,008.3 million, reflecting the financing of the Capri acquisition through the issuance of senior unsecured notes and term loan facilities.
The company reported net cash provided by operating activities of $119.5 million, a significant increase from $75.3 million in the prior year. Tapestry's strategic focus includes enhancing customer relationships, driving fashion innovation, and expanding into under-penetrated markets, despite challenging macroeconomic conditions.
About TAPESTRY, INC.
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