COACH parent Tapestry beat Wall Street expectations for fourth-quarter results on robust demand for its popular Tabby handbags, signalling resilient interest for affordable luxury goods despite a global spending slowdown.
The company’s shares rose 8 per cent in premarket trading on Thursday (Aug 15).
Demand for trendy high-end bags, apparel, and accessories from higher-income shoppers has held up for a few luxury companies as spending tempers after a recent jump.
Tapestry reported net sales of US$1.59 billion for the three-month ended Jun 29, topping analysts’ estimates of US$1.57 billion, based on LSEG data.
Excluding items, earnings per share of US$0.92 also beat expectations of US$0.88.
Tapestry has banked on Tabby shoulder bags from the Coach family to drive more full-price sales at its stores, even as the other two brands under its umbrella, Stuart and Kate Spade, struggle with weak demand in China and the US.
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Sales at Coach, which accounts for more than 70 per cent of the company’s revenue, rose 2 per cent on a constant currency basis.
Gross margin rose 250 basis points, following a 190 basis points rise in the prior quarter.
Meanwhile, the company said it expects to close the Capri deal this year.
In April, the US Federal Trade Commission sued to block Tapestry’s US$8.5 billion buyout of Michael Kors parent Capri on concerns that a deal would “eliminate” direct competition.
Last week, Capri reported a 12 per cent fall in revenue on a constant currency basis for the first quarter. REUTERS
