Tapestry Inc, the parent company of the iconic brand Coach, has defied expectations by surpassing sales projections in its most recent quarter, primarily driven by robust demand in China. This development is certainly a beacon of hope amidst the turbulent times faced by the fashion industry in light of the global pandemic.
Earlier this year, the luxury handbag and apparel sector experienced a severe blow due to widespread lockdowns and a sharp drop in tourism triggered by the COVID-19 crisis. However, Tapestry’s remarkable success in China, with sales soaring by double digits, mirrors a larger trend unfolding across the fashion landscape. Prominent European luxury brands such as LVMH, Kering, and Hermès have also witnessed similar resurgence in sales within China and other parts of Asia.
An influential factor fueling this sales renaissance is the surge in demand from affluent Chinese consumers who typically indulged in luxury shopping overseas. As international travel remains restricted, these consumers have pivoted towards local boutiques and digital platforms to fulfill their upscale shopping cravings, resulting in a notable spike in sales figures for Tapestry.
Despite a 13.7% dip in net sales to $1.17 billion for the quarter ending on Sept. 26, Tapestry managed to outperform analysts’ predictions of $1.07 billion in sales. Notably, the company witnessed a substantial boost in net income, soaring to $231.7 million from $20 million in the previous year.
A substantial contributor to this favorable financial performance stemmed from Tapestry’s adept management of expenses and leveraging tax advantages. The company disclosed over $90 million in tax benefits during the latest quarter, which significantly fortified its net income.
Overall, Tapestry’s adept handling of the challenging retail terrain coupled with its shrewd capitalization on China’s luxury market resurgence bodes well for its growth trajectory into the forthcoming year. With digital sales on the upswing and demand resurging in pivotal markets, Tapestry is buoyant about its future prospects in the competitive fashion realm.
Sources:
1. Forbes – Tapestry Inc Quarterly Earnings Report
2. Business of Fashion – Tapestry Surpasses Earnings Estimates
