Tapestry Boosts Sales, Profit Forecast Amid Strong Demand for Premium Accessories

Tapestry has revised its annual guidance upward, citing robust demand for its popular Tabby bags and suede boots in North America and China. The company's shares rallied 13% pre-market.

For the second quarter, Tapestry exceeded revenue expectations, driven by a 10% growth in Coach brand sales (on a constant currency basis). This surge was primarily attributed to full-price sales of handbags.

The Coach Tabby crossbody bags and Coachtopia leather handbags have gained immense traction on social media platforms like TikTok, appealing to a younger consumer base. Tapestry's strategic focus on selling key styles at full price across channels, while swiftly introducing new products, has helped maintain consumer engagement.

In contrast, rival Capri Holdings (Michael Kors) issued a weaker forecast, facing challenges with its turnaround plan post its unsuccessful $8.5 billion merger attempt with Tapestry.

Tapestry saw a 4% uptick in North America sales and 3% growth in the Greater China market during the quarter. Notably, the company continues to invest in China, despite concerns about weakening demand among European peers.

For the quarter ended December 28, Tapestry reported net sales of $2.20 billion, surpassing the analyst consensus of $2.11 billion (LSEG data). The company projects fiscal 2025 revenue to reach approximately $6.85 billion, exceeding its previous target of $6.75 billion. Analysts had estimated average revenue of $6.76 billion (LSEG data).

Earnings per share are now anticipated to fall between $4.85-$4.90, compared to the earlier forecast of $4.50-$4.55.