Tapestry Raises Guidance, Shares Surge 13% on Strong Coach Sales
Tapestry Inc. has once again raised its guidance for the year, citing stronger-than-expected sales at its flagship Coach brand.
The handbag company now anticipates revenue exceeding $6.85 billion in the current fiscal year, representing a 3% increase year-over-year. This marks a revision from the guidance provided in November.
Coach posted an impressive 11% sales growth in the most recent quarter, surpassing analysts' expectations. The company's shares subsequently rose 13% in premarket trading in New York on Thursday.
Tapestry has also lifted its profit outlook, projecting earnings per diluted share between $4.85 and $4.90. This is higher than the previous range of $4.50 to $4.55. The upward revision is partly driven by the $2 billion accelerated share buyback announced in November. Additionally, Tapestry has $800 million remaining under its previous share repurchase authorization.
The company's outlook incorporates the expected 10% tariff on goods imported from China into the US, which is anticipated to have a negligible impact on fiscal 2025 results.
Tapestry's performance contrasts sharply with that of rival Capri Holdings Ltd., which reported a 12% decline in sales in the recent quarter. Tapestry had previously planned to acquire Capri, owner of Michael Kors and Versace, but the deal was called off in November due to antitrust concerns.
Since then, Tapestry's shares have rallied, reflecting relief among investors that the company will avoid getting entangled in Capri's turnaround efforts and can instead focus on driving growth at Coach and improving performance at Kate Spade. Sales at Kate Spade declined 10% in the latest quarter, exceeding expectations.