Tapestry Surges On Upbeat Q3 Earnings


Shares of Tapestry (NYSE: TPR) surged 8% on Thursday after the luxury fashion company posted third-quarter earnings that beat estimates. Higher sales of Kate Spade handbags and shoes offset lower sales at its Stuart Weitzman and Coach segments.

Tapestry also affirmed its 2019 earnings outlook which was in line with estimates. Revenue rose 1% but fell short of estimates by $10 million. Over the past 12 months Tapestry stock has lost 32.3% while the S&P 500 has added 6.7%.

TPR Earnings & Outlook

Tapestry said it earned $117.4 million, or $0.40 per share for the quarter ended March 30 compared with $140.3 million, or $0.48 a share, a year earlier. Adjusted for items such as stock-based compensation, earnings per share fell to $0.42 from $0.54 in the year-ago period.

Revenue rose to $1.33 billion from $1.32 billion last year. Analysts surveyed by Refinitiv had estimated adjusted earnings of $0.41 per share on revenue of $1.34 billion.

Coach revenue slid to $965 million from $969 million a year-ago and was below Wall Street estimate of $970.5 million. Same-store sales, however, rose 1% topping expectations of a 0.8% rise.

Kate Spade revenue jumped to $281 million from $269 million a year earlier but was below analyst estimates of $285.1 million. Same-store sales fell 3% surpassing expectations of a 3.8% drop. Stuart Weitzman net sales increased to $85 million from $84 million in the year ago period.

Looking ahead, Tapestry projects full-year revenue to increase at a low-to-mid-single-digit rate from last year while analysts estimate revenue of $6.05 billion which indicates a 3% growth. The company expects full-year adjusted earnings of $2.55 to $2,60 per share. Wall Street estimates stand at earnings of $2.58 per share for the year.

Tapestry CEO Comments

Tapestry Chief Executive Victor Luis said, “We are pleased with our third quarter performance, highlighted by increases in sales and gross margin on a constant currency basis in each of our three brands. Most notably, we again drove positive comps at Coach and generated a significant sequential comp improvement at Kate Spade with Nicola Glass’s new collection resonating with consumers globally.”

“Further, we continued to make key investments across our portfolio and to realize meaningful synergies from the successful integration of Kate Spade as we harness the power of our multi-brand model. Taken together, adjusted EPS was in-line with our expectations for the quarter,” Luis added.

Tapestry Inc. Profile

Tapestry is a designer and retailer of handbags, apparel, footwear, and accessories. Approximately 57% of sales came from North American Coach retail and wholesale distribution in fiscal 2018.

Coach also sells its products through international-owned retail, foreign department stores, and international wholesale-serviced specialty shops. Acquisitions include strong brands like Stuart Weitzman (6% of revenue in fiscal 2018) and Kate Spade (22% of revenue in fiscal 2018).