Kate Spade owner Tapestry raises annual forecast as luxury demand soars

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Feb 10 (Reuters) – Tapestry Inc (TPR.N) raised its full-year revenue and profit forecast on Thursday as consumers splurge on luxury handbags and apparel in the states United States and Europe, increasing the owner’s share of Kate Spade by 3% in premarket trading.

Rivals Capri (CPRI.N), Ralph Lauren (RL.N) and European LVMH (LVMH.PA) also benefited from a rebound in demand for high-end fashion as locked-in customers returned to events social and office. Read more

Tapestry, which also owns Coach and Stuart Weitzman, raised its share buyback target for the year to $1.25 billion from $1 billion.

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Luxury goods companies have been grappling with rising costs, however, after the pandemic drove up labor shortages, transportation costs and inflation, forcing Tapestry and its peers to raise prices. price in response.

“The pandemic has taught businesses that they can sell less, charge more and make more money. Who chooses to retain that knowledge will be key,” said Simeon Siegel, analyst at BMO Capital Markets.

“(Tapestry) continues to take a meticulous approach to increasing pricing and elevating its brand. This is helping to alleviate freight and other supply chain pressures felt by all.”

The luxury goods maker’s gross margin rose to 68.1% in the second quarter, driven by higher transportation costs incurred to maintain product flow and meet consumer demand.

The company is forecasting revenue of about $6.75 billion in fiscal 2022, down from a previous estimate of nearly $6.6 billion. He expects annual earnings of $3.60 to $3.65 per share, up from $3.45 to $3.50 earlier.

Total revenue rose 27% to $2.14 billion in the second quarter ended Jan. 1, beating the average analyst estimate of $2 billion, according to IBES data from Refinitiv.

On an adjusted basis, it earned $1.33 per share, above estimates of $1.18.

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Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Devika Syamnath

Our standards: The Thomson Reuters Trust Principles.

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