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Tapestry takes an $855 million write-down on Kate Spade—and casts serious doubt on its strategy to turn around underperforming brands

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When Tapestry announced two years ago it was buying Michael Kors owner Capri Holdings in a deal regulators ultimately scuttled, the fashion company argued that the tech and supply-chain infrastructure it had built for its Coach brand would allow it to turn around underperforming brands more quickly.

It turns out Tapestry can’t even turn around an acquired brand it has owned for years, well before that Capri news was announced in 2023. Tapestry said on Thursday it had taken a $855 million write-down on Kate Spade largely because of a decline in both current and future expected cash flows along with investments the company is making.

Yet the company keeps claiming Kate Spade, where sales fell 10% last year, can flourish with just a bit more work. But Tapestry bought Kate Spade, beloved for its quirky handbags and looks, eight years ago for $2.4 billion, and has little to show for it so far. In the fiscal year ended in June, Kate Spade sales came in at almost $1.2 billion, a touch lower than where they were the year the company was acquired, and well below their apex three years ago when they neared $1.5 billion.

“We know from work that we’ve done that there’s great demand for the Kate Spade brand, we just frankly haven’t executed very well over the last several years. But as we said here today, we’re smarter from a brand-building capability standpoint,” said Scott Roe, Tapestry’s chief financial officer, to Barron’s on Thursday.

In 2017, Coach Inc., which then also owned the small high-end shoe brand Stuart Weitzman, renamed itself Tapestry in hopes of becoming the American equivalent to European fashion conglomerates LVMH and Kering, albeit one focused on upscale brands rather than outright luxury. Those ambitions were behind its planned $8.5 billion megadeal to buy Capri, which owns Versace and Jimmy Choo. (Capri recently sold Versace to Prada, though that deal has not closed yet.)

Still, the Federal Trade Commission blocked the Tapestry-Capri deal last year, saying it harmed competition in the handbag segment. Tapestry’s rationale was that shared resources (big tech systems, clout with vendors and store landlords) would help optimize a brand’s cost structure and lift an underperforming but still viable label. But given its struggles to finally make the Kate Spade acquisition pay off, it’s hard to see how Tapestry would have managed to turn around another three brands in need of repair.

Still, it’s not all bad news. Tapestry has overseen an astonishing rehabilitation of the Coach brand in recent years, reminiscent of Ralph Lauren’s big comeback.

A decade ago, the classic New York leather goods brand, beloved for its high-quality stylish bags, was hurting after years of being overextended in search of growth and ultimately cheapening itself. Since then, Coach has staged a massive comeback by selling much more through its own stores and less at department stores, and arming itself with tons of data about its shoppers and their habits to reduce product misfires and know what they are gravitating toward more quickly and accurately.

One of the ironies of Tapestry’s Kate Spade woes is that in 2017, it had said buying Kate Spade would help it win over younger consumers. Today, Gen Z and younger millennial shoppers are all over Coach and represent about 60% of the 1.5 million new shoppers Tapestry won in the past year. GlobalData managing director Neil Saunders says Coach has won them over through its data but also because Coach “has become more contemporary and on trend.”

And with the shriveling of Kate Spade (and excluding Stuart Weitzman, which Tapestry recently unloaded), Coach represents nearly 80% of Tapestry sales. So Tapestry is really just Coach plus a struggling brand one-fifth its size, rather than a portfolio. Last year, Coach sales rose 10% and propelled Tapestry’s shares, nearly doubling them. (They fell on Thursday in large part because of a $160 million hit from tariffs.)

Introducing the 2025 Fortune Global 500, the definitive ranking of the biggest companies in the world. Explore this year’s list.



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Fortune Brainstorm AI San Francisco starts today, with Databricks, OpenAI, Cursor, and more on deck

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It’s been a crazy few weeks in AI.

Granted, it feels like it’s always been a crazy few weeks in AI. But this cycle has been especially notable: Reports that Sam Altman has declared a “code red” around improving ChatGPT have made waves, while Databricks is reportedly in talks to raise at a jaw-dropping $134 billion valuation. Anthropic is reportedly looking at a real-life IPO, and everyone’s always watching for news from perhaps the biggest ascent of the year: Cursor, the AI coding juggernaut that’s now valued at more than $29 billion. 

And today, Brainstorm AI starts, and so many of these key players will be with us live in San Francisco, including Databricks CEO Ali Ghodsi, OpenAI COO Brad Lightcap, Cursor CEO Michael Truell, San Francisco Mayor Daniel Lurie, Google Cloud CEO Thomas Kurian, and Rivian CEO RJ Scaringe, plus some starpower from Joseph Gordon-Levitt and Natasha Lyonne. 

If you’re attending the conference, come find me! I’ll realistically be the one running around in a bright pantsuit. And if you can’t make it, we’ll be livestreaming the show, too – tune in here.

See you soon,

See you tomorrow,

Allie Garfinkle
X:
@agarfinks
Email:alexandra.garfinkle@fortune.com
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Joey Abrams curated the deals section of today’s newsletter.Subscribe here.

Venture Deals

Antithesis, a Tysons Corner, Va.-based platform designed to validate that software works before it launches, raised $105 million in Series A funding. JaneStreet led the round and was joined by AmplifyVenturePartners, SparkCapital, and others.

ParadigmHealth, a Columbus, Ohio-based clinical research platform, raised $78 million in Series B funding. ARCHVenturePartners led the round and was joined by DFJGrowth and existing investors.

Oxzo, a Santiago, Chile-based provider of oxygenation services for aquaculture, raised $25 million in funding from S2GInvestments.

Quanta, a San Francisco-based accounting platform, raised $15 million in Series A funding. Accel led the round and was joined by OperatorCollective, NavalRavikant, DesignerFund, and others.

LizzyAI, a New York City-based AI-powered talent interviewing company, raised $5 million in seed funding. NEA led the round and was joined by Speedinvest and ZeroPrimeVentures

PvX, a Singapore-based provider of user-acquisition financing for gaming companies, raised $4.7 million in a seed extension from Z Venture Capital, DrivebyDraftKings, and existing investors.

Corma, a Paris, France-based developer of a copilot for AI teams, raised €3.5 million ($4.1 million) in seed funding. XTXVentures led the round and was joined by TuesdayCapital, KimaVentures, 50Partners, OlympeCapital, and angel investors.

Private Equity

NITEOProducts, a portfolio company of HighlanderPartners, acquired Folexport, a Tualatin, Ore.-based manufacturer of carpet, fabric, and hard surface cleaning products. Financial terms were not disclosed.



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Why the worst leaders sometimes rise the fastest

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History is crowded with CEOs who have flamed out in very public ways. Yet when the reckoning arrives, the same question often lingers: How did this person keep getting promoted? In corporate America, the phenomenon is known as “failing up,” the steady rise of executives whose performance rarely matches their trajectory. Organizational psychologists say it’s not an anomaly. It’s a feature of how many companies evaluate leadership.

At the core is a well-documented bias toward confidence over competence. Studies consistently show that people who speak decisively, project certainty, and take credit for wins—whether earned or not—are more likely to be perceived as leadership material. In ambiguous environments, boards and senior managers often mistake boldness for ability. As long as a leader can narrate failure convincingly—blaming market headwinds, legacy systems, or uncooperative teams—their upward momentum may continue.

Another driver is asymmetric accountability. Senior executives typically oversee vast, complex systems where outcomes are hard to tie directly to individual decisions. When results are good, credit flows upward. When results are bad, blame diffuses downward, and middle managers, project leads, and market conditions become convenient shock absorbers. This allows underperforming leaders to survive long enough to secure their next promotion.

Then there’s the mobility illusion. In many industries, frequent job changes are read as ambition and momentum rather than warning signs. An executive who leaves after short, uneven tenures can reframe each exit as a “growth opportunity” or a strategic pivot. Recruiters and boards, under pressure to fill top roles quickly, often rely on résumé signals, like brand-name firms, inflated titles, and elite networks, rather than deep performance audits.

Ironically, early visibility can also accelerate failure upward. High-profile roles magnify both success and failure, but they also increase name recognition. An executive who runs a troubled division at a global firm may preside over mediocre results, yet emerge with a reputation as a “big-company leader,” making them attractive for a CEO role elsewhere.

The reckoning usually comes only at the top. As CEO, the buffers disappear. There is no one left to blame, and performance is judged in the blunt language of earnings, stock price, profitability, or layoffs. The traits that once fueled ascent, such as overconfidence, risk-shifting, and narrative control, become liabilities under full scrutiny.

The central lesson for aspiring CEOs is that the very system that rewards confidence, visibility, and narrative control on the way up often masks weak execution until the top job strips those protections away. Future leaders who want to avoid “failing upward” must deliberately build careers grounded in verifiable results and direct ownership of outcomes because at the CEO level, there is no narrative strong enough to substitute for performance.

Ruth Umoh
ruth.umoh@fortune.com

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Leadership lesson

Anthropic’s Dario Amodei on when a startup gets too big to know all employees: “It’s an inevitable part of growth.”

News to know

Investors are questioning OpenAI’s profitability amid its massive spending while increasingly viewing Alphabet as the deeper-pocketed winner in the AI race. Fortune

Trump warned that Netflix’s $72 billion bid for Warner Bros. Discovery could face antitrust scrutiny, suggesting it would create an overly dominant force in streaming. Fortune

An etiquette camp is trying to help Silicon Valley shed its sloppy image by teaching tech elites how to dress and behave as their influence grows. WaPo

IBM is reportedly in advanced talks to buy data-infrastructure firm Confluent for about $11 billion, bolstering its AI data capabilities. WSJ

Even as women reach top roles in politics and business at record levels, public confidence in their leadership is stagnating or declining. Bloomberg

Terence “Bud” Crawford, the undefeated 38-year-old boxing champion, has earned more than $100 million and even turned Warren Buffett into a fan. Forbes

Big Tech leaders now warn that artificial intelligence is advancing to the point where it could begin replacing even CEOs, reshaping the very top of corporate leadership. WSJ

This is the web version of the Fortune Next to Lead newsletter, which offers strategies on how to make it to the corner office. Sign up for free.



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The workforce is becoming AI-native. Leadership has to evolve

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One of the most insightful conversations I have had recently about artificial intelligence was not with policymakers or peers. It was with a group of Nokia early-careers talents in their early 20s. What stood out was their impatience. They wanted to move faster in using AI to strengthen their innovation capabilities. 

That makes perfect sense. This generation began university when ChatGPT launched in 2022. They now account for roughly half of all ChatGPT usage, applying it to everything from research to better decision-making in knowledge-intensive work. 

Some people worry that AI-driven hiring slowdowns are disproportionately impacting younger workers. Yet the greater opportunity lies in a new generation of AI-native professionals entering the workforce equipped for how technology is transforming roles, teams, and leadership.

Better human connectivity 

One of the first tangible benefits of generative AI is that it allows individual contributors to take on tasks once handled by managers. Research by Harvard Business School found that access to Copilot increased employee productivity by 5% in core tasks. As productivity rises and hierarchies flatten, early-career employees using AI are empowered to focus on outcomes, learn faster, and contribute at a higher level.

Yet personal productivity is not the real measure of progress. What matters most is how well teams perform together. Individual AI gains only create business impact when they align with team goals and that requires greater transparency, alignment, and accountability.

At Nokia, we ensure that everyone has clear, measurable goals that support their teams’ objectives. Leaders need to be open about their goals to their managers and to their reports. And everyone means everyone. Me included. That way goals are not only about recognition and reward. They become an ongoing dialogue between leaders and their teams. It’s how we’re building a continuous learning culture that thrives on feedback and agility, both essential in the AI era. 

Humans empowered with AI, not humans versus AI

AI’s true power lies in augmenting human skills. Every role has a core purpose – whether in strategy, creativity, or technical problem-solving – and AI helps people focus on that. 

During the COVID-19 pandemic, more than 60 chatbots were deployed in 30 countries to handle routine public health queries, freeing up healthcare workers to focus on critical patient care. Most health services never looked back. 

The same pattern applies inside companies. Some of the routine tasks given to new hires are drudge work and not a learning experience. AI gives us a chance to rethink the onboarding, training, and career development process.

Take an early-career engineer. Onboarding can be a slow process of documentation and waiting for reviews. AI can act as an always-on coach that gives quick guidance and helps people ramp up. Mentors then spend less time on the basics and more time helping engineers solve real problems. Engineers can also have smart agents testing their designs, ideas, and simulating potential outcomes. In this way, AI strengthens, rather than substitutes, the human connection between junior engineers and their mentors and helps unlock potential faster.

Encourage experimentation and entrepreneurship 

During two decades of the Internet Supercycle (1998-2018), start-ups created trillions of dollars in economic value and roughly half of all new jobs in OECD countries

As AI lowers the barriers to launching and scaling ventures, established companies must find new ways to encourage experimentation, nurture innovation through rapid iterations, and give employees the chance to commercialize and scale their ideas.

There is a generational shift that increases the urgency: more than 60% of Gen Z Europeans hope to start their own businesses within five years, according to one survey. To secure this talent, large organizations must provide the attributes that make entrepreneurship attractive. Empowering people with agility, autonomy, and faster decision-making creates an edge in attracting and keeping top talent.

At Nokia, our Technology and AI Organization is designed to strengthen innovation capabilities, encourage entrepreneurial thinking, and give teams the support to turn ideas into real outcomes.

More coaching, less managing 

Sporting analogies are often overused in business as the two worlds don’t perfectly align, yet the evolution of leadership in elite football offers useful lessons. Traditionally, managers oversaw everything on and off the pitch. Today, head coaches focus on building the right team and culture to win. 

Luis Enrique, the manager of Paris-St. Germain football club, last season’s UEFA Champion’s League winner, exemplifies this shift. He transformed a team of stars into a star team, while also evolving his coaching style, elevating both individual and collective potential.

Of course, CEOs must switch between both roles (as I said, the worlds don’t perfectly align) – setting vision and strategy while also cultivating the right team and culture to succeed. AI can help leaders do both with more focus. It gives us quicker insight into what is working, what is not, and where teams need support.

I have been testing these tools with my own leadership team. We are using generative AI to help us evaluate our decisions and to understand how we work together. It has revealed patterns we might have missed, and it has helped us get to the real issues faster. It does not replace judgment or experience. It supports them.

Yet the core of leadership does not change. AI cannot build trust. It cannot set expectations. It cannot create a culture that learns, improves, and takes responsibility. That still comes from people. And in a world shaped by AI, the leaders who succeed will be the ones who coach, who listen, and who help teams move faster with confidence.

Nokia’s technology connects intelligence around the world. Inside the company, connecting intelligence is about how people work together. It means giving teams the tools, support and culture they need to grow and perform with confidence. Connecting intelligence is how teams win.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.



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