Tapestry and Capri Holdings have officially ended their proposed merger agreement, a decision taken mutually amidst legal uncertainties and an impending deadline set for February 2025. Tapestry, the parent company of renowned brands like Coach, Kate Spade, and Stuart Weitzman, is now shifting its focus back to organic growth. This strategy is bolstered by solid financial performance, agile brand management, and a strong cash flow.
As part of this new direction, Tapestry has authorized a substantial $2 billion share buyback plan while simultaneously reaffirming its annual dividend rate of $1.40 per share. Additionally, the company has outlined plans to redeem $6.1 billion of senior notes related to acquisitions, showcasing a commitment to financial strength amid changing strategies.
Joanne Crevoiserat, Tapestry’s CEO, emphasized the company’s adaptability and multiple pathways to growth. With confidence in their financial health, Crevoiserat stated, “We have significant runway ahead and are enthusiastic about our commitment to driving growth through our organic business.” The strong performance in the first quarter sets a positive precedent for the initiatives to come.
Scott Roe, Tapestry’s CFO and COO, commented on the commitment to enriching shareholder value while effectively managing cash flow to support investments in their brands. The company’s recent authorization for additional share repurchases signals its robust balance sheet and ongoing commitment to maintaining a solid investment-grade credit rating.
Looking forward, Tapestry intends to fortify its core brands, with no immediate plans for acquisitions. The focus will remain on enhancing the growth of Coach and Kate Spade. Tapestry has maintained its long-term financial targets, including a gross debt-to-EBITDA ratio below 2.5. The company’s financial outlook for Fiscal 2025 remains stable, with updates on performance expected in February 2025.
In light of the terminated merger, Capri Holdings will receive approximately $45 million to cover transaction-related expenses. As Tapestry shifts gears and solidifies its strategies, it looks ahead with renewed focus and operational agility in the competitive fashion landscape.
