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 raised its full-year revenue and profit forecast on Thursday as consumers splurge on luxury handbags and apparel in the United States and Europe, boosting the Kate Spade owner’s shares 3 percent in premarket trade.
Rivals Capri, Ralph Lauren and Europe’s LVMH also benefited from a rebound in demand for high-end fashion as cooped-up customers returned to social events and offices.
Tapestry, which also owns Coach and Stuart Weitzman, raised its share buyback target for the year to $1.25 billion from $1 billion.
Luxury goods companies have been struggling with rising costs though, after the pandemic drove up labor shortages, freight charges and inflation, forcing Tapestry and its peers to raise prices in response.
ADVERTISEMENT
“The pandemic taught companies they could sell less, charge more and make more money. Who chooses to retain those learnings will be key,” BMO Capital Markets analyst Simeon Siegel said.
“[Tapestry] continues to show a meticulous approach on driving up price and elevating their brand. This is helping to mitigate the freight and other supply chain pressures being felt by all.”
The luxury goods maker’s gross margin was 68.1 percent for the second quarter, dragged by higher freight costs incurred to maintain product flow and meet consumer demand.
The company forecast fiscal 2022 revenue of about $6.75 billion, compared with a prior estimate of nearly $6.6 billion. It expects annual profit of $3.60 to $3.65 per share, up from $3.45 to $3.50 earlier.
Total revenue rose 27 percent to $2.14 billion in the second quarter ended Jan. 1, surpassing analysts’ average estimate of $2 billion, according to IBES data from Refinitiv.
On an adjusted basis, it earned $1.33 per share, above estimates of $1.18.
By Ananya Mariam Rajesh; Editor: Devika Syamnath
Learn more:
ADVERTISEMENT
How Tapestry Is Raising Prices
Coach’s parent company Tapestry is finding success by targeting what it sees as a new “white space” in the market: wealthier customers.
Designer brands including Gucci and Anya Hindmarch have been left millions of pounds out of pocket and some customers will not get refunds after the online fashion site collapsed owing more than £210m last month.
Antitrust enforcers said Tapestry’s acquisition of Capri would raise prices on handbags and accessories in the affordable luxury sector, harming consumers.
As a push to maximise sales of its popular Samba model starts to weigh on its desirability, the German sportswear giant is betting on other retro sneaker styles to tap surging demand for the 1980s ‘Terrace’ look. But fashion cycles come and go, cautions Andrea Felsted.
The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.