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Coach, Kate Spade Parent Company Logs $227 Million Profit, Raises Full-year Guidance

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  • TPR

Tapestry Inc. continues to make gains in the post-pandemic fashion landscape.

The fashion group — parent to the Coach, Kate Spade and Stuart Weitzman brands — reported quarterly earnings Thursday before the market opened, improving on the top and bottoms lines thanks to strength in North America, China and online. The company raised its full-year guidance as a result, causing shares to shoot up nearly 8 percent at the start of Thursday’s session.

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“We delivered another quarter of solid performance, reflecting strong customer engagement and increased demand for our brands,” Joanne Crevoiserat, chief executive officer of Tapestry, said in a statement. “Importantly, revenue trends accelerated compared to pre-pandemic levels driven by North America, as well as continued growth in digital and China ​​— two key drivers of long-term opportunity. Tapestry’s standout results highlight our teams’ extraordinary execution and the foundational changes we’ve made to transform into a more consumer-centric, data-driven and responsive organization through the pillars of our Acceleration Program.

“Overall, this performance reaffirms our conviction in our ability to fuel continued revenue and profit gains,” she continued. “While supply chain challenges persist due to the global pandemic, we’re remaining agile and taking deliberate actions to meet growing consumer demand. The incremental share repurchase program announced today further underscores our confidence in the strength of our brands and our ability to drive sustainable growth. Taken together, we are increasing our revenue and [earnings-per-share] outlook for the fiscal year, reflecting our first-quarter performance and strong underlying business trends. We remain sharply focused on accelerating growth and profitability and are committed to creating value for all stakeholders.”

For the three-month period ending Oct. 2, Tapestry’s total revenues increased 26 percent to $1.48 billion, up from $1.17 billion the same time last year.

At Coach, the company’s largest brand, total sales were more than $1.1 billion for the quarter, up from $875 million the same time last year. Kate Spade had $299 million in sales, compared with $240 million last year, while Stuart Weitzman registered $66.5 million in revenues, compared with $56.4 million in revenues during last year’s first quarter.

Tapestry’s sales in North America grew more than 40 percent during the quarter, compared with a year earlier. In mainland China, revenues increased 25 percent during the same time period.

The firm also had continued strength in its digital channels, with revenue growth of nearly 50 percent, compared to the same time last year, and up 275 percent compared with pre-pandemic levels.

Tapestry logged nearly $227 million in profits as a result, compared with about $232 million a year earlier.

The company increased its full fiscal 2022 outlook as a result. The retailer now expects revenues for the full year to be about $6.6 billion, up from the previous outlook of $6.4 billion, and earnings-per-diluted share in the range of $3.45 and $3.50 a share, up from its prior guidance between $3.30 and $3.35 a share.

Tapestry has more than 1,400 brick-and-mortar stores across its three brands around the world, and ended the quarter with $1.65 billion in cash, cash equivalents and short-term investments, as well as $1.19 billion in long-term debt.

Shares of Tapestry, which closed up 0.33 percent Wednesday to $42.61 apiece, are up about 68 percent, year-over-year.