Parent company of Coach posts strong quarter; lifts guidance
Tapestry delivered another excellent quarter and said it is on track to return about $1 billion to shareholders in fiscal 2023.
The parent company of Coach, Kate Spade and Stuart Weitzman also said it acquired more than 1.2 million new customers in North America, more than half of them Gen Z and millennials.
Tapestry posted net income of $187 million, with earnings per share of $0.78, for its third quarter (ended April 1) and up from $123 million, or $0.46 per share, in the year-ago period. The results easily topped analysts’ estimates of earnings per share of $0.60.
Net sales rose 5% to $1.51 billion from $1.44 billion a year ago. Analysts had expected sales of $1.44 billion. Direct-to-consumer sales rose roughly 10% with a low-teen increase in stores and a mid-single-digit gain in digital.
International sales grew nearly 20%, led by a greater-than-expected increase in Greater China, which rose approximately 20%. The company saw growth of over 20% in Japan and “Other Asia,” with a 4% increase in Europe. It had a low-single-digit gain in North America.
By brand, sales at Coach rose 7% to $1.144 billion, and sales at Stuart Weitzman sales rose 7% to $68.3 million. Kate Spade fell 1% to $297.2 million.
“Our strong third-quarter results were significantly ahead of expectations, demonstrating the power of brand building, customer centricity and our agile operating model,” stated Joanne Crevoiserat, CEO. “We delivered solid revenue gains, expanded both gross and operating margin, and drove robust earnings growth. Importantly, we continued to advance our strategic agenda, creating lasting customer relationships around the world through product innovation and compelling omnichannel experiences — a testament to the ingenuity of our talented teams.”
Tapestry now expects full-year revenue of about $6.7 billion, and earnings per share of $3.85 to $3.90. Analysts are expecting earnings per share of $3.72 and revenue of $6.6 billion.
The company also expects to return about $1 billion to shareholders in fiscal 2023.
“Looking forward, we are well-positioned to deliver sustainable, profitable growth against a volatile backdrop,” stated Crevoiserat. “We’re harnessing the strength of our iconic brands, enhanced by our direct-to-consumer, globally diversified, and data-driven platform. At the same time, we’re continuing to make investments that fuel brand magic and empower us to move at the speed of the consumer both today and for years to come. Our runway is significant and we remain steadfast in our commitment to drive long-term growth and shareholder value.”
As of April 1, Tapestry operated 934 Coach stores (with 330 in North America), 399 Kate Spade stores (with 206 in North America) and 95 Stuart Weitzman stores (with 36 in North America).