Tapestry Inc.’s turnaround continues with more notable gains in China and the digital business.
The fashion group — parent to the Coach, Kate Spade and Stuart Weitzman brands — reported quarterly earnings Thursday before the market opened, improving on top and bottom lines and registering nearly $92 million in quarterly profits.
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“Our third quarter results significantly outpaced expectations, underscoring the power of the Acceleration Program and enthusiasm for our brands,” Joanne Crevoiserat, chief executive officer of Tapestry, said in a statement. “For the third consecutive quarter, we achieved operating income gains — compared to both [fiscal year]’20 and [fiscal year]’19 — supported by a continued reduction in promotional activity, higher [average unit retail] and disciplined expense management.
“Building on this momentum, we are increasingly optimistic about our ability to generate sustainable top and bottom-line growth,” Crevoiserat continued. “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. In this context, we remain focused on driving brand relevance and customer engagement through product innovation and compelling marketing, supported by data-driven insights and a digital-first mindset. We will also continue to lean into our competitive advantages, including our globally diversified, direct-to-consumer model and distort investments to high-growth opportunities. We are confident that our clear, consumer-centric strategy, powerful brands and differentiated, scalable platform uniquely position us to capture market share at higher levels of profitability.”
Still, Wall Street was not satisfied. The company’s stock fell more than 1 percent in premarket hours.
For the three-month period ending March 27, total company revenues increased 19 percent to $1.27 billion, compared with just over $1 billion during last year’s third quarter, with sales increasing at all three brands.
Coach, the firm’s largest and most lucrative brand, returned to pre-pandemic revenue levels with more than $963 million in sales for the quarter, up from about $772 million a year ago. Revenues at Kate Spade rose 1 percent to $252 million, up from roughly $249 million a year ago, while sales at Stuart Weitzman totaled $57.4 million, compared with $50.7 million the same time last year.
The company logged a quarterly profit of $91.7 million as a result, compared with a $677 million loss the same time last year.
Tailwinds for the quarter included the China business, with revenues surging 175 percent compared to last year, or 40 percent compared to the pre-pandemic third quarter in 2019, and the digital business, which had triple-digit growth, compared to last year. Tapestry also recruited about 700,000 new customers in the last three months through its e-commerce channels in North America.
The retailer ended the quarter with $1.65 billion in cash and cash equivalents, $1.59 billion in long-term debt and 1,460 stores, or 944 Coach, 413 Kate Spade and 103 Stuart Weitzman locations.
Tapestry now expects revenues for the full fiscal year to increase at a mid-teens rate, compared to the prior year.
Shares of Tapestry, which closed up 0.85 percent Wednesday to $48.41 a piece, are up more than 244 percent, year-over-year.
