Coach Parent Company Reports Earnings and Sales Are Back to Pre-Pandemic Levels

Tapestry, the parent company of brands Coach and Kate Spade, reported financial results for the third quarter this week that revealed sales in North America had returned to pre-pandemic levels.

The company reported a triple digit revenue increase as well in Mainland China compared to last year’s levels as well as 40% growth compared to 2019.

Tapestry Chief Executive Joanne Crevoiserat said the latest results “significantly outpaced expectations,” and were boosted by Tapestry’s online business and heightened demand for its purses, shoes and other accessories in Asia.

Shares of the stock were still falling despite the strong performance. This may be due to overall revenue still being below 2019 levels.
BMO Capital Markets analyst Simeon Siegel has said this puts Tapestry below a median of retailers who have reported their quarterly results so far.

For the quarter ended March 27th, Tapestry reported earnings per share of 51 cents adjusted compared to 31 cents adjusted expected, per Refinitiv. Revenue at $1.27 billion was better than the $1.22 billion expected.

Net income for the fiscal third quarter climbed to $91.7 million, or 32 cents per share, compared with a net loss of $677.1 million, or $2.45 per share, a year earlier. Excluding one-time charges, the company earned 51 cents per share, better than the 31 cents that analysts had forecast, using Refinitiv.

Net sales rose 19% to $1.27 billion from $1.07 billion a year earlier, coming ahead of analysts’ estimates of $1.22 billion.

Tapestry also said it gained 400,000 new customers online during the quarter.

Sales at the Coach banner were up 25% compared with 2020 levels, and flat compared with the same period in 2019. Kate Spade grew 1% from 2020, and was down 10% compared with 2019.

The company is also the parent of Stuart Weitzman were sales were up 13% compared with a year earlier, but on a two-year basis dropped 33%.

“While the environment remains volatile, we see encouraging signs of recovery as vaccination efforts progress, resulting in increased consumer confidence, strong demand for our categories, and improving in-store traffic trends,” CEO Joanne Crevoiserat said.

“Our third-quarter results significantly outpaced expectations, underscoring the power of the Acceleration Program and enthusiasm for our brands,” Crevoiserat said in a statement. “Through a sharpened focus on the consumer, we fueled new customer acquisition at Coach, Kate Spade and Stuart Weitzman and delivered robust sales growth led by digital and China.”

For the fiscal year, Tapestry now expects revenues to increase at a mid-teens rate, including the expectation for 2021 operating income and earnings per share to rise compared with the 2019 fiscal year.

“Building on this momentum, we are increasingly optimistic about our ability to generate sustainable top- and bottom-line growth,” Crevoiserat said. “Looking forward, while the environment remains volatile, we see encouraging signs of recovery as vaccination efforts progress, resulting in increased consumer confidence, strong demand for our categories and improving in-store traffic trends.”

Tapestry shares are up about 55% year to date.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.