Tapestry Inc, the parent company of popular fashion brand Coach, has boosted its profit forecast for the year due to a variety of factors. These include price increases, strong demand for Coach handbags, and a rebound in the luxury market of China. As a result, the company’s shares rose by 8% and it exceeded market expectations for its third-quarter results. One of the biggest contributors to Tapestry’s improved performance was a 20% increase in revenue from China after the country lifted its lockdown measures. Additionally, Tapestry’s gross margin improved to 72.8% from 69.9% in the previous year.
While other fashion houses have experienced a slowdown in demand in the U.S., Tapestry has managed to outperform expectations. In March, luxury spending in the U.S. hit a three-year low. However, Coach handbags, which are typically priced under $1,000, have attracted a significant number of Gen Z and millennial consumers, leading to an increase in new customers and higher spending per customer. In fact, Tapestry added 400,000 new customers in North America, which is its largest market.
Despite the overall positive performance, Tapestry’s CEO Joanne Crevoiserat noted that consumer trends softened in April, and the company expects a slight decline in fourth-quarter North America sales. However, Tapestry has made efforts to avoid missing out on demand by significantly tightening inventories. Its end-quarter inventory levels are only 2% higher than last year, demonstrating that the company is well-prepared to meet demands.
As a result of its strong performance, Tapestry now predicts that its fiscal 2023 per-share earnings will be between $3.85 and $3.90, compared to the previous estimate of $3.70 to $3.75. Additionally, the company has raised its annual revenue forecast to nearly $6.7 billion, up from about $6.6 billion. This positive outlook highlights the resilience of the Coach brand and Tapestry’s ability to navigate the challenging luxury retail landscape in the U.S.
Useful links:
– For more information on Tapestry Inc’s earnings and performance, visit Tapestry Inc Investor Relations.
– To explore the latest Coach handbags and accessories, visit Coach Official Website.
