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Tapestry (TPR) stock up 7% as handbag demand returns

14:38, 11 November 2021

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Coach bags in a retail store
Tapestry files fiscal first-quarter earnings - Photo: Richard Levine / Alamy Stock Photo

The luxury fashion holding company Tapestry (TPR) known for its Coach, Kate Spade and Stuart Weitzman brands reported strong earnings Thursday morning that sent shares higher.

Revenue was up 26% year over year to $1.48bn, above the FactSet consensus of $1.44bn. Compared with pre-pandemic levels, revenue was up 9%.

However, net income declined slightly to $226.9m from $231.7m during the same period the year prior. Diluted income per share dropped three cents year over year to 80 cents per share.

The results suggest luxury fashion brands are rebounding as consumers return to buying high-end women’s handbags after a couple of rough quarters when consumers were prioritising other purchases.

Investors react

Tapestry shares rose by more than 7% to a price of around $46 per share at market open on the positive earnings momentum.

The company’s full-year 2022 outlook also increased to $6.6bn in revenue, up from earlier outlooks of $6.4bn, representing a record level of sales growth for the company in the mid-teens percentage range.

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Short position overnight fee 0.0018%
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11,456.30 Price
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Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 1.5

Investors also reacted to the announcement of a new $1bn share repurchase program, doubling its prior commitments. Some $250m of those buybacks are already completed.

Growing segments

Tapestry’s two main growth areas were in digital and international sales.

Revenue from digital channels was up 50% year over year and up 275% over pre-pandemic levels. However, the company did not provide a precise figure for how much revenue was driven through these digital channels.

Likewise, sales in mainland China were up 25% year over year and up 65% over pre-pandemic levels. Greater China sales now make up 19% of Tapestry’s overall sales compared with 14% in other Asian countries, 62% in North America and 5% in the rest of the world, according to a company presentation.

Read more: Women’s fashion brand Lulu’s files for IPO

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