Tapestry Tops Earnings Estimates as Sales Return to Pre-Pandemic Levels
Tapestry Inc. posted a third-quarter earnings and sales beat as the luxury market headed for a rebound from the COVID-19 pandemic.
For the three months ended March 27, the retail group — parent to Coach, Kate Spade and Stuart Weitzman — logged adjusted profits of $145 million, or adjusted earnings of 51 cents per share, compared with the prior year’s loss of $76 million, or loss of 27 cents per share. Wall Street had predicted earnings of 31 cents per share. Revenues increased 19% to $1.27 billion, versus consensus bets of $1.22 billion.
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“Our third-quarter results significantly outpaced expectations, underscoring the power of the Acceleration Program and enthusiasm for our brands,” CEO Joanne Crevoiserat said in a statement. “Through a sharpened focus on the consumer, we fueled new customer acquisition at Coach, Kate Spade and Stuart Weitzman and delivered robust sales growth led by digital and China.”
Although Coach continued to rake in the lion’s share of revenues, all of Tapestry’s brands saw improvement: Sales at Coach jumped 25% to $964 million, while Kate Spade advanced 1% to $252 million and Stuart Weitzman rose 13% to $57 million.
What’s more, the company saw continued momentum in its digital business, driving triple-digit growth year over year, as well as improved revenue trends in stores on both a one- and two-year basis. Also notable was its performance in mainland China, where revenues spiked roughly 175% over the prior year and 40% compared with the same period in 2019. In North America, it recorded a mid-teens sales uptick, which represented a return to pre-pandemic levels.
For the fiscal year, Tapestry now expects revenues to increase at a mid-teens rate, including the expectation for 2021 operating income and earnings per share to rise compared with the 2019 fiscal year.
“Building on this momentum, we are increasingly optimistic about our ability to generate sustainable top- and bottom-line growth,” Crevoiserat added. “Looking forward, while the environment remains volatile, we see encouraging signs of recovery as vaccination efforts progress, resulting in increased consumer confidence, strong demand for our categories and improving in-store traffic trends.”
