Shares Beat Expectations as Coach and Stuart Weitzman Brought Sales Growth
Tapestry Inc., the parent company of Coach, Kate Spade, and Stuart Weitzman, reported stronger-than-expected earnings for its fiscal first quarter, driven by solid performance from its flagship Coach brand. Adjusted earnings reached $1.02 per share, surpassing analyst expectations of $0.95, while net income was $186.6 million, or $0.79 per share, compared to $195 million, or $0.84, a year earlier. Quarterly revenue remained steady at $1.51 billion, slightly above the consensus estimate of $1.47 billion.
Sales for the Coach brand rose 1% to $1.2 billion, countering a 7% decline at Kate Spade, which recently appointed L’Oréal veteran Eva Erdmann to lead its turnaround efforts. The Stuart Weitzman brand saw a modest 2% growth. In light of these results, Tapestry has raised its full-year forecast, now projecting $6.75 billion in sales, up from its previous estimate of $6.7 billion. Adjusted earnings per share are expected to be in the range of $4.50 to $4.55, a slight increase from the earlier $4.45 to $4.50 forecast.
CEO Joanne Crevoiserat noted that the results highlight the company’s brand strength and operational agility, stating, “Our first-quarter results outperformed expectations, showcasing the brand magic and operational excellence that fuel our strategic growth agenda.” She emphasized Tapestry’s position of strength, pointing to its diversified brand portfolio and robust cash flow as drivers for continued growth.
The company’s acquisition plans were recently impacted by a federal injunction blocking its $8.5 billion deal to buy Capri Holdings, owner of Michael Kors. The Federal Trade Commission intervened, citing antitrust concerns, which a federal judge upheld. This ruling has cast uncertainty over Tapestry’s merger plans, although it remains focused on organic growth initiatives.
Tapestry’s stock has gained 35.2% this year, outperforming the S&P 500’s 24.3% increase. Analysts are watching closely for future earnings revisions as the company looks to maintain momentum in a challenging retail environment.