Raphael Stevens

Shares of Kate Spade owner Tapestry increased after earnings.
The company, whose brands include Coach, beat analyst expectations and raised its annual profit forecast, despite slowing traffic in China.
Tapestry’s gains came a day after Capri’s disappointing third quarter earnings sent that stock falling.

Florida, Orlando Vineland Premium Outlets, Coach leather goods sign outside entrance.
Jeff Greenberg | Universal Images Group | Getty Images

Tapestry, the company behind Coach and Kate Spade, beat analyst expectations Thursday for its second quarter earnings and raised its annual profit forecast. Though, it was a different story for its competitor Capri Holdings, whose brands include Michael Kors and Versace.
Tapestry’s gains, sending the stock up over 3% Thursday, came a day after Capri’s disappointing third quarter earnings report. Capri shares fell more than 25% over the past two days after it lowered its fiscal fourth quarter and fiscal 2024 outlook, and it missed estimates across revenues, EPS and margins.

Tapestry said almost half of its 2.6 million new North American customers were Gen Z and millennials. It posted increased gains in the average selling price of handbags, including Coach’s heart-shaped handbags and Bandit shoulder bags.
Rick Patel, managing director at Raymond James, said both Tapestry and Capri have “done a great job” bringing new, younger customers into their brands through social media and website appeal. Though, he acknowledges the Coach brand has executed its go-to-market strategy better than Michael Kors.
Tapestry has spent years retooling its brands and making them relevant for Gen Z and millennial consumers, said Ian Schatzberg, CEO and co-founder of brand agency General Idea, who has worked with Capri and Tapestry.
Schatzberg told CNBC Tapestry has tried to represent different age groups and stylistic demographics by finding ambassadors for different communities and centering them within their products. He said some competitors have not employed this diversity of cultural context in their marketing strategy.
“What you’re seeing with the Tapestry numbers is an indication of a portfolio of brands that has really focused on modernizing the way in which they behave and connecting with consumers who may be under some degree of pressure but are still looking to buy handbags, apparel, outerwear and footwear,” Schatzberg said.

Tapestry reported per-share earnings of $1.36 on Thursday, topping estimates of $1.27, according to a survey of analysts conducted by Refinitiv. Tapestry beat EPS estimates three times in the last four quarters.
Revenue matched analyst expectations of $2.03 billion for the quarter. This was a 5% year-over-year decrease from $2.14 billion.

Impact of China

China sales, though, declined 20% due to incremental pressures associated with Covid outbreaks.
Capri reported double-digit revenue declines in Asia following slower store traffic as the result of China’s unwinding of its zero-Covid policy.
Patel said the “primary culprit” of Capri’s shortfall was a decline in wholesale business — which has been weak across the board for global brands due to inventory challenges.
“One of the key differences between these two businesses is that Tapestry is about 90% retail and e-commerce, whereas Capri is about 73% retail and e-commerce, and that channel has been significantly outperforming,” Patel said.
Tapestry raised its fiscal 2023 forecast to earnings of $3.70 to $3.75 per share, in contrast to its prior estimate of $3.60 to $3.70. It estimates fiscal 2023 revenue of approximately $6.6 billion, a slight decline from the prior year.
Schatzberg said a crucial component of Tapestry’s success has been its emphasis on creating stories and narratives around its products. He anticipates fierce competition among accessible luxury companies over the next few years to pin down brand marketing and attract younger audiences.
“If the story isn’t aligned, and the product isn’t aligned to where the consumer is, it’s just less successful, which is really a conversation about brand marketing,” Schatzberg said.

The state of luxury

Aspirational luxury companies such as Tapestry and Capri have grappled with competing against larger European companies, whose customers are more affluent and consistent buyers. Some European luxury brands have recently created products at broader price points that encroach at times on those of companies including Capri or Tapestry.
“Given inflation and the other macro headwinds that these companies are facing in this environment, I think the higher-end customers are more resilient than the aspirational luxury customers,” Raymond James’ Patel said. “That ties into the consistent results of these other companies.”
Despite these headwinds, Raymond James holds outperform ratings on Tapestry and Capri, though it has lowered Capri’s price target to $60 from $73 on lower estimates.
“Despite some of the channel issues, I do believe that … brand and product affinity remains favorable, and we also think the expectations for a gradual recovery in China in 2024 are reasonable,” Patel said.
Fashion company Ralph Lauren also beat third quarter expectations Thursday. The company reported a 1% rise in net revenue to $1.83 billion, compared with Refinitiv estimates of $1.76 billion.
Despite a 2% decline in wholesale revenue in North America, Ralph Lauren said same-store sales there grew 2%. The company said it saw growth in acquisition of younger consumers led by rising brand awareness.

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SpaceX on Thursday test fired 31 of the 33 engines in the towering rocket booster of its Starship prototype.
Called a “static fire,” the milestone test is the final major hurdle before SpaceX tries to launch the nearly 400-foot-tall rocket to space.
CEO Elon Musk said in a subsequent tweet that SpaceX turned off one engine before the test and another engine “stopped itself.”

SpaceX test fires engines in the towering rocket booster of its Starship prototype on February 9, 2023.
Source: SpaceX

SpaceX on Thursday test fired 31 of the 33 engines in the towering rocket booster of its Starship prototype, as the company prepares to launch the rocket to orbit for the first time.
Called a “static fire,” the milestone test is the final major hurdle before SpaceX tries to launch the nearly 400-foot-tall rocket to space.

The company said in a tweet shortly after the test that the engines at the base of the Super Heavy booster fired for “full duration,” meaning the expected length of the test.
CEO Elon Musk said in a subsequent tweet that SpaceX turned off one engine before the test and another engine “stopped itself.”
“Still enough engines to reach orbit!” Musk said.

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SpaceX has steadily been building up to the first flight test of its Starship rocket. President and COO Gwynne Shotwell on Wednesday stressed the first launch attempt would be experimental.

An aerial view of a Starship prototype stacked on a Super Heavy booster at the company’s Starbase facility outside of Brownsville, Texas.

Starship is designed to carry cargo and people beyond Earth and is critical to the National Aeronautics and Space Administration’s plan to return astronauts to the moon. SpaceX won a nearly $3 billion contract from the space agency in 2021.

While SpaceX had hoped to conduct the first orbital Starship launch as early as summer 2021, delays in progress and regulatory approval have pushed back that timeline. SpaceX needs a license from the Federal Aviation Administration in order to launch Starship.
Shotwell said Wednesday, “I think we’ll be ready to fly right at the timeframe that we get the license.”
The company will next analyze the result of Thursday’s static fire test. Shotwell estimated that a successful static would see SpaceX ready to launch the first Starship orbital flight “within the next month or so.”

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California Gov. Gavin Newsom this week proposed for the first time a bill that would protect the western Joshua tree, a native desert plant, and prohibit anyone from importing, exporting, selling or removing the species without a state permit.
The legislation, called the Western Joshua Tree Conservation Act, comes after the California Fish and Game Commission failed to act on a petition from 2019 that sought to list the tree as threatened under the California Endangered Species Act.
A rise in development and climate-related events like drought and wildfires have threatened the western Joshua tree, an iconic and ecologically critical species located located across the state’s desert region.

A Joshua tree found along Highway 178 (Isabella Walker Pass Road near Highway 14) is viewed on November 14, 2022, near Inyokern, California.
George Rose | Getty Images

California Gov. Gavin Newsom this week proposed for the first time a bill that would protect the western Joshua tree, a native desert plant, and prohibit anyone from importing, exporting, selling or removing the species without a state permit.
The legislation, called the Western Joshua Tree Conservation Act, comes after the California Fish and Game Commission failed to act on a petition from 2019 that sought to list the tree as threatened under the California Endangered Species Act.

The commission voted unanimously Wednesday to postpone its decision on the petition by the Center for Biological Diversity until Newsom’s proposed legislation is approved or rejected by the Legislature.
A rise in development and climate-related events such as drought and wildfires have threatened the western Joshua tree, an iconic and ecologically critical species located across the state’s desert region. Recent studies show that Joshua trees are dying off from hotter and drier conditions, and without state protections could be largely gone from the Joshua Tree National Park by the end of the century.
However, opponents of the petition have argued that listing the trees as threatened could hurt private property development and renewable energy projects planned for the area. Roughly half of the western Joshua tree’s range in California is on private land and most of the habitat is not currently protected from development.

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The bill would require the department to prepare a conservation plan for the species by the end of next year, periodic reviews to confirm the effectiveness of the plan and consultations with impacted Native American tribes.
The department said that since the tree is so widespread across the public and private desert region, the permitting process for the species is more complex than for any species currently listed under the California Endangered Species Act.

Brendan Cummings, the Center for Biological Diversity’s conservation director and a Joshua Tree resident, called the trees “an irreplaceable and highly threatened part of California’s natural heritage.”
“We’re pleased the Newsom administration recognizes their importance and has proposed groundbreaking legislation to ensure these wonderful trees forever remain part of California’s Mojave Desert landscape,” Cummings said in a statement.

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Disney CEO Bob Iger said that “everything is on the table” as it considers buying Comcast’s one-third stake in Hulu.
The company currently owns two-thirds of the general entertainment streaming service.
Iger’s comments come after he announced a broader restructure of the company, minutes after posting first-quarter earnings.

Disney CEO Bob Iger said Thursday that “everything is on the table” with streaming service Hulu.
Disney owns two thirds of the streaming service, which focuses on more adult-oriented general entertainment content such as the series “Only Murders in the Building” and the sci fi thriller “Prey.” Iger wants Disney to focus on its more family-friendly franchises, such as “Frozen” and the Marvel Cinematic Universe.

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Disney has been expected to buy the rest of it from Comcast as early as January 2024.
Iger’s comments on Hulu came as he told CNBC’s David Faber that he was planning on paring back Disney’s general entertainment content.
He said that he wasn’t going to speculate whether Disney is a buyer or seller of Hulu right now.
However, Iger also noted that “streaming is the future” and that the streaming segment of the business is top priority.
Disney and Comcast have gone back and forth on Hulu. Comcast introduced a proposal to buy Disney’s 66% stake in Hulu, but Disney rejected the idea, CNBC previously reported. In May 2019, the two companies reached a tentative agreement that Comcast would sell its minority stake to Disney by 2024.

As the 2024 deadline gets closer, Disney has the option of buying out Comcast’s 33% stake. Disney guaranteed a minimum value of $27.5 billion for Hulu. In advance of Disney’s potential stake buyout, Comcast has transferred shows like “Saturday Night Live” to its Peacock streaming platform.
Iger’s comments regarding Hulu on Thursday come after Disney announced 7,000 job cuts, along with an overall reorganization of the business into three central divisions: streaming and media operations, ESPN and parks. It also said it would cut $5.5. billion in costs. The reorganization marks Iger’s most significant action since returning to the helm in November.
Shares of Disney closed 1% lower on Thursday.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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Alec Baldwin is facing a lawsuit filed by the parents and sister of Halyna Hutchins, the cinematographer who was killed in the “Rust” set movie shooting.
Last year, Hutchins’ husband settled a separate lawsuit regarding the shooting.
Baldwin was charged with involuntary manslaughter in January.

Hilaria Baldwin and Alec Baldwin speak for the first time regarding the accidental shooting that killed cinematographer Halyna Hutchins, and wounded director Joel Souza on the set of the film “Rust”, on October 30, 2021 in Manchester, Vermont.
MEGA | GC Images | Getty Images

Alec Baldwin is being sued by family members of Halyna Hutchins, the cinematographer who was killed on the set of the movie “Rust.”
The lawsuit against Baldwin and others involved in the “Rust” production was filed on behalf of Hutchins’ sister and family in Los Angeles County Superior Court on Thursday. The complaints include negligence, battery, intentional infliction of emotional distress, and loss of consortium.

The family’s attorney, Gloria Allred, said that Baldwin has not reached out to Hutchins’ mother, father, and sister since she was killed. “We haven’t heard from Alec Baldwin, the man with the gun,” Allred said at a Thursday press conference.
The family currently lives in Ukraine and did not attend the in-person press conference because, according to Allred’s co-counsel John Carpenter, they “are fighting the fight” on the front lines of the war.
Despite being filed in California, the civil suit is operating under New Mexico law since that is where the incident took place. In California, no one other than a spouse can file a loss of consortium claim, but that restriction does not apply in New Mexico. The family’s attorneys said they filed in California because that is where the “Rust” production company is based.
Allred is also representing Mamie Mitchell, a script supervisor on the film who is also suing Baldwin for injuries related to the shooting.
“It may be that at some point we will want to consolidate this case with our case of Mamie Mitchell,” said Allred.

The family’s lawsuit comes weeks after Baldwin was officially charged with two counts of involuntary manslaughter by a New Mexico District Attorney’s office. The Santa Fe prosecutors allege that Baldwin had been “distracted” during essential firearm training sessions. He held the gun that fired the fatal bullet at Hutchins.
The prosecutors filed similar against Hannah Gutierrez-Reed, the film’s armorer, alleging that she knew that Baldwin needed more training and also was responsible for checking the gun’s safety before use.
Baldwin’s attorneys have said he would fight the charges. A lawyer for Baldwin declined to provide immediate comment on the new lawsuit. Baldwin, an actor known for his roles in “The Departed” and “The Hunt for Red October,” is also a producer of “Rust.”
The civil suit has a different purpose than the ongoing criminal investigation, though the two cases may have some overlapping witnesses, according to the attorneys. It is seeking “an acknowledgement of what was taken” for the family to “help in the healing process,” said Carpenter. It also requires a lower burden of proof than the criminal case, noted Allred.
Last February, Hutchins’ widower, Matthew Hutchins, sued Baldwin for wrongful death, months after Hutchins was killed in October 2021.
That lawsuit, which accused Baldwin and others of reckless conduct that led to the tragedy, was settled in October last year. The settlement ended with the widower becoming a producer for “Rust,” which had aimed to resume filming in January. Allred declined to comment on whether the family supports the continued filming of “Rust.”
Matthew Hutchins is not involved in this second civil case, though, according to Allred, he and the family are “in communication. Let’s put it that way.”

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