Coach gives big sales lift to Tapestry as brand’s hot streak continues
Tapestry Inc. is off to a strong start in its first quarter as its Coach brand continues to attract new customers — particularly among Gen Z consumers.
The parent company of Coach and Kate Sade reported record quarterly revenue and earnings per share amid growth across all its key markets. It also hiked its full-year forecast.
Tapestry’s net profits totaled $274.8 million, with earnings per share of $1.28, for the quarter ended Sept. 27, up from $186.6 million, or $0.79 per share, in the year-ago period. Adjusted earnings were $1.38 per share, topping analysts estimates of $1.26 per share.
Net sales rose 13% to $1.70 billion, ahead of estimates of $1.62 billion. (Excluding its recently sold Stuart Weitzman business, sales increased 16%.) Sales growth was fueled by the Coach brand, whose sales increased 22% to $1.42 billion. Sales at Kate Spade, which is still attempting a turnaround, fell 8% to $260.2 million.
By region, sales rose 18% in North America, 32% in Europe and total APAC (+8%), including Greater China (+19%).
The company acquired over 2.2 million new customers globally, driven by a growing number of Gen Z consumers versus prior year. Gen Z represented approximately 35% of new customers.
Tapestry CEO Joanne Crevoiserat told CNBC that the company’s first-quarter sales were fueled by attracting new customers, particularly within Gen Z.
“The Gen Z consumer, specifically, is highly fashion engaged, spending slightly more of their budget on fashion,” she said.
Tapestry raised its full-year outlook for both sales and profits. It now expects revenue around $7.3 billion for the year, up from its prior expectations of nearly $7.2 billion. Earnings per share are expected to range from $5.45 to $5.60, compared to its prior guidance of $5.30 to $5.45.
In September, Tapestry unveiled a three-year strategic plan that includes growing Coach to a $10 billion business by widening its audience. In the earnings statement, Crevoiserat said the company’s first quarter “outperformance” marked a powerful start its next chapter.
“Through focused execution of our strategies, we brought creativity and craftsmanship to our customers around the world, achieving revenue and earnings increases ahead of expectations,” she said. “From this position of strength, we are raising our full year outlook, reinforcing that our advantages are structural and sustainable. We remain confident in our bright future, with a proven track record and an unwavering commitment to deliver compounding growth and long-term shareholder value.”
The company said it plans to buy back $1 billion in common stock this fiscal year, up from the previous forecast of $800 million.
