Tapestry to shed Stuart Weitzman for $105 million

Coach owner Tapestry will sell footwear label Stuart Weitzman for $105 million (£83 million) in cash to Dr Scholl owner Caleres.

Both companies announced the sale yesterday (19 February), after Tapestry said it was focused on driving growth for its organic business had "significant runway ahead" following an unsuccessful $8.5 billion (£6.7 billion) merger with Versace and Michael Kors parent Capri Holdings.

Coach's Tabby handbag buoyed sales for Tapestry during the golden quarter, while Kate Spade and Stuart Weitzman were hit by weak demand in North America and China.

Tapestry bought Stuart Weitzman in 2015 for about $530 million (£420 million) and is now offloading the label for around 20% of what it paid for it.

The footwear brand reported an increase in full-year loss to $21.2 million (£16.8 million) from $6.7 million (£5.3 million) the year prior. Currently it makes up about 3.6% of the company's total annual revenue.

"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," said Caleres CEO Jay Schmidt.

Schmidt added that he expects Stuart Weitzman to operate profitably following its integration into Caleres' portfolio.

Caleres owns luxury footwear brands such as Sam Edelman and Vince, and operates almost 1,000 stores across the United States.

The deal is expected to close this summer, with Caleres aiming to fund the acquisition through its revolving credit agreement.

BofA Securities is working as Caleres's financial advisor, and Morgan Stanley & Co. LLC is serving on behalf of Tapestry.

In October 2024, Tapestry's attempt to aquire its American Rival Capri was blocked by the Federal Trade Commission, who said the merger would negatively affect consumers by making the affordable handbag market less accessible.

"The decision granting the FTC’s request for a preliminary injunction is disappointing and, we believe, incorrect on the law and the facts. Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants.

"We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer."