Tapestry wrote down $855M on Kate Spade, eight years after paying $2.4B

Tapestry, the parent of Coach, said on Thursday 14 August 2025 that it had taken an $855 million write-down on Kate Spade, largely because of a decline in current and future expected cash flows along with investments it is making. Tapestry bought Kate Spade eight years earlier for $2.4 billion. In the fiscal year that ended in June, Kate Spade sales came in at almost $1.2 billion, a touch below the year it was acquired and well below an apex three years earlier of nearly $1.5 billion. Sales had fallen 10% the year before.

Fortune pointed out that the miss undercut Tapestry's pitch for its planned $8.5 billion Capri Holdings takeover, which the FTC blocked in 2024. Tapestry had argued that the tech and supply-chain infrastructure it built for Coach would turn underperforming brands around faster. If it could not turn around Kate Spade, Fortune wrote, it was hard to see how it would have managed three more brands in need of repair.

Tapestry's chief financial officer, Scott Roe, told Barron's there was great demand for the brand 'we just frankly haven't executed very well over the last several years', adding that the company was smarter on brand building. Fortune noted that with Kate Spade shrinking and Stuart Weitzman recently sold, Coach is nearly 80% of Tapestry's sales, so the company is 'Coach plus a struggling brand one-fifth its size' rather than a portfolio.

$855M write-down on a brand bought for $2.4B; fiscal-2025 sales near $1.2B, below an apex near $1.5B three years earlier; sales fell 10% in the prior year.

Kate Spade was bought in 2017 partly to win younger consumers, but Coach, not Kate Spade, ended up winning Gen Z and young millennials.

Sales fell after a peak near $1.5B and ended fiscal 2025 slightly below the level at acquisition.

Tapestry's executives conceded they had not executed well on the brand over several years.

The turnaround thesis, shared tech and supply-chain systems, had not delivered on a brand Tapestry already owned.

A claim that shared systems can turn around underperforming brands has to be proved on the brand you already own before it is used to justify buying more.

Tapestry kept saying Kate Spade could flourish with more work. Its shares fell on the day, in large part because of a $160M tariff hit. The Capri deal had already been blocked by the FTC, and Tapestry had recently unloaded Stuart Weitzman.