Tapestry Posts an Earnings Beat. But the Outlook Is Downcast.

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Photograph by Victor J. Blue/Bloomberg

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Shares of Coach parent company Tapestry were rising in premarket trading on Thursday following a third-quarter earnings beat, even as the luxury goods manufacturer said it faced margin pressures and cut its outlook for 2022.

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Tapestry (ticker: TPR ) posted adjusted earnings of 51 cents per share, above Street estimates calling for 41 cents per share. Revenue clocked in at $1.44 billion, mostly in line with estimates for $1.42 billion.

Margins also contracted for the quarter to 69.9%, impacted by higher freight expenses. During the same period last year, the gross margin was 71.6%.

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The company cut its earnings per share outlook, saying it expected a headwind of between 25 cents to 30 cents-a-share due to incremental Covid pressure in China, as well as a 17-cent negative impact due to a shift in international trade policies .

Tapestry is now forecasting revenue of $6.7 billion for the year, with earnings per share diluted close to $3.45. Revenue guidance is in line with expectations, but earnings per share fell lower than the $3.61 analysts were predicting.

Tapestry stock was up 2.5% in premarket trading on Thursday. The shares have lost 34% this year.

Write to Sabrina Escobar at [email protected]

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Credit: www.marketwatch.com /

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