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Tapestry (TPR +5%) is making a nice move following its Q4 (Jun) earnings report this morning. We wanted to check in to see how this supplier of luxury accessories is doing in the current macro environment. Its flagship brand is Coach, but it owns several other luxury brands, including Kate Spade, and Stuart Weitzman.

• It reported upside EPS, but with notably smaller upside than the past two quarters. Revenue fell 1.8% yr/yr to $1.59 bln, which was in-line. Tapestry lowered its FY25 EPS guidance, but part of that is from the suspension of share repurchase activity due to the proposed acquisition of Capri Holdings (CPRI) and an estimated currency headwind of approximately $0.20 relative to prior guidance.
• The majority of TPR's sales are in North America at 65% of FY24 revs. However, as you can see above, TPR gets impacted quite a bit by FX given its high percentage of international sales (35% of FY24 revs). Speaking of which, Tapestry would have posted +1% revenue growth on a constant currency basis.
• Sales in Q4 were led by international growth, with gains across key regions, including increases of +26% CC yr/yr in Europe with strength across channels, including higher spend from local consumers and tourists, +12% CC in Other Asia with notable growth in Malaysia, Australia and Korea, and +2% CC in Japan.
• However, the recovery in China has been more gradual than originally expected as Q4 sales declined -10% CC. China is TPR's second largest market (15% of FY24 revs) behind only North America. In Greater China, revenue declined as expected given that TPR was lapping 50% growth in the year ago period. TPR continues to navigate a more challenging consumer backdrop in China. In North America, sales declined 1% amid a challenging consumer backdrop.
• Tapestry gave an update on its previously announced deal to acquire Capri Holdings, which owns Versace, Jimmy Choo and Michael Kors. In April 2024, the FTC filed a lawsuit in an attempt to block the proposed acquisition. The company is working expeditiously to close the transaction in calendar year 2024.

The trading action indicates that investors are pleased with how Tapestry closed out FY24. It was not a blowout quarter, but sales growth was strong if you back out North America and China. Given all the macro headwinds and consumers seeking value, investors are pleased with these results as they could have been worse.