Coach owner Tapestry shares rise on upbeat outlook and abating supply chain fears

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  • Coach owner Tapestry’s shares rose after the high-end handbag owner raised its revenue forecast for the year.
  • The retailer said that amid global supply chain issues, shoppers should not worry about finding empty shelves this holiday season.
  • CFO Scott Roe said Tapestry plans to spend about $70 million on air freight in its fiscal second quarter to accelerate the delivery of goods in time for Christmas.

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Shares of Coach owner Tapestry rose more than 8% on Thursday as the high-end handbag owner raised its revenue forecast for the year, saying shoppers shouldn’t worry about finding empty shelves this holiday season. needed.

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Chief Financial Officer Scott Rowe said the retailer plans to spend about $70 million on air freight in its fiscal second quarter to accelerate the delivery of goods in time for Christmas. Its hope is to avoid backlogged ports where some container ships are left waiting to be unloaded for weeks on end. Global supply chain issues have put the retailer in a precarious position ahead of the holidays.

“We are taking deliberate steps to accelerate inventory growth, and we feel comfortable positioning our inventory to meet demand,” Roe said on an earnings conference call.

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Tapestry raised its fiscal year 2022 sales outlook to $6.6 billion from a previous forecast of $6.4 billion. And it raised its expectations for adjusted earnings per share from $3.45 to $3.50, up from $3.30 to $3.35.

Analysts were looking for adjusted earnings of $3.36 on revenue of $6.42 billion, according to Refinitiv data.

The company’s board also approved a $1 billion stock buyback program.

Retail rivals including Ralph Lauren and Michael Kors owner Capri Holdings have also forecast annual sales in recent days, citing a rebound in social outings that drive demand for luxury goods.

Jefferies analyst Randall Konick applauded Tapestry’s fiscal first-quarter report, but said Capri remains a strong house of brands.

Of Tapestry’s latest results, Konik said, “While the overall results are commendable, Coach has matured considerably, Kate remains overwhelming, and we question why the Stuart brand remains in the portfolio.” “We don’t see enough stock upside.”

Shares of Tapestry are up more than 50% to date, including Thursday’s gains. Its market cap is around $13 billion. Capri, which has a market cap of $9.8 billion, has seen its shares rise nearly 53% so far this year.

In the first quarter, net income fell to $226.9 million, or 80 cents per share, from $231.7 million, or 83 cents per share, a year ago. Excluding items, the company earned 82 cents. Sales in the quarter rose to $1.48 billion from $1.17 billion a year ago.

Get the full earnings press release from Tapestry Here,

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