The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Tapestry Inc beat quarterly profit estimates on Thursday on higher demand for luxury goods in China and fewer holiday discounts, sending the shares of the Coach handbag maker up nearly 3 percent.
Affluent customers in China returned to shopping within the country as the coronavirus restrictions eased in the second half of 2020, boosting the New York fashion house’s revenue from the key Asian market by more than 30 percent in its second quarter.
Gross margin expanded by 300 basis points as Tapestry sells products at a relatively higher prices in mainland China. It also benefited from a reduction in shipments to discount-prone department stores.
The company’s net income rose over 4 percent to $311 million, or $1.11 per share, in the quarter ended December 26. Excluding items, it earned $1.15 per share, while analysts had expected $1.01 per share, according to IBES data from Refinitiv. Net sales fell about 7 percent to $1.69 billion, hurt by store closures and capacity restriction, but beat market expectation of $1.63 billion.
ADVERTISEMENT
Tapestry said it expects full-year revenue to increase at a high-single digit rate on a 52-week basis and around 10 percent on 53-week basis. Analysts expected full-year revenue to rise 6.9 percent.
Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur
The luxury goods maker is seeking pricing harmonisation across the globe, and adjusts prices in different markets to ensure that the company is”fair to all [its] clients everywhere,” CEO Leena Nair said.
Hermes saw Chinese buyers snap up its luxury products as the Kelly bag maker showed its resilience amid a broader slowdown in demand for the sector.
The group’s flagship Prada brand grew more slowly but remained resilient in the face of a sector-wide slowdown, with retail sales up 7 percent.
The guidance was issued as the French group released first-quarter sales that confirmed forecasts for a slowdown. Weak demand in China and poor performance at flagship Gucci are weighing on the group.