Luxury fashion conglomerate Tapestry said its digital channel, along with international sales, led growth at its Coach brand. However, ecommerce sales declined at Kate Spade, as the luxury retailer’s direct sales, via stores and ecommerce, decreased 16% year over year for its third quarter ended Sept. 30.
Coach returned to Chinese marketplace Tmall in July after leaving the ecommerce behemoth over counterfeiting concerns in 2011, returning in 2015 to again leave in 2016 to focus on its own business.
The third Tmall try has shown “terrific results,” according to Coach CEO Josh Schulman on a call transcribed by Seeking Alpha, with 90% of new customers for the brand. Tmall, owned by Alibaba Group Holding Limited, is No. 2 in the ranking for Internet Retailer Online Marketplaces.
Tapestry reported Kate Spade’s ecommerce revenue fell 2% year over year amid a 6% overall revenue decline for the brand this quarter. Tapestry pointed to the brand’s reliance on the North American market, where growth is harder across the company as both mall and outlet traffic slow.
Tapestry did not disclose exact ecommerce figures, but is No. 194 in the Internet Retailer 2019 Top 1000. Total sales for the first fiscal quarter, ended Sept. 28, fell 1.4% to $1.36 billion from $1.38 billion during its first quarter last year.
- Sportswear brand Under Armour Inc. (No. 102) reported a decline in direct-to-consumer revenue third quarter because of “traffic and conversion challenges” in ecommerce among other challenges, according to chief financial officer David Bergman on an earnings call transcribed by Seeking Alpha. Direct sales, which includes revenue from ecommerce and company-owned stores, decreased 1% to $463 million for the quarter ended Sept. 30, the retailer reported without disclosing more precise figures. Total sales declined 0.7% for the quarter to $1.43 billion from $1.44 billion during the same period last year. For the first three quarters, revenue grew 0.8% to $3.83 billion from $3.80 billion during the first three quarters last year. Under Armour also announced that the U.S. Securities and Exchange Commission and the U.S. Department of Justice are investigating the brand for its accounting practices under former chief financial officer Chip Molloy, who left in early 2017.
- Connected workout machine maker Peloton Interactive Inc. (No. 286) generated $157.6 million in revenue from selling its stationary bikes and treadmills during its third fiscal quarter ended Sept. 30. That’s up 102.3% from $77.9 million during the same period the prior year. That’s lead to a similar increase in paying subscribers, who can access exclusive workouts on Peloton machines. Peloton reported a 103% increase in subscribers compared to the end of the third quarter last year to 562,744 by the end of the quarter. These subscribers generated $67.2 million in revenue for the quarter. Peloton has 81 showrooms but sells its bikes and treadmills mostly online. Losses for the quarter shrank 8.6% to $49.8 million from $54.5 million. The sale of bikes is already profitable, and CEO John Foley said the entire business is “within striking distance of profitability” as it recoups customer acquisition costs from long-term subscribers.
- Discount seller Groupon Inc. (No. 55) reported ecommerce revenue from its Groupon Goods platform decreased 24.8% to $233.3 million for the third quarter ended Sept. 30 from $310.3 million during the third quarter last year. In a letter to shareholders, the retailer said cautious consumer sentiment in Europe resulted in a more competitive than expected landscape for its Goods division, resulting in an 18.2% decline in international Goods revenue to $129.1 million from $157.9 million. For the year so far, Goods revenue declined 18.7% compared to the same period last year, to $791.8 million from $973.8 million.
- Pharmacy chain Walgreens Boots Alliance Inc. (No. 43) is reportedly considering going private in what would be the largest leveraged buyout in history. However, the report faced skepticism from Wall Street analysts who argued the numbers didn’t add up. Deutsche Bank argued that “it’s a great story until you do the math,” saying finance concerns would likely prevent a transaction. Analysts from Raymond James echoed the sentiment, saying the surprising development of going private is unlikely due to “the sheer size of the transaction, the lack of real estate ownership and the declining fundamentals.”
Bloomberg contributed to this report.Favorite