Coach handbag maker Tapestry forecast full-year sales above analysts’ expectations on Tuesday after reporting a 31 % leap in fourth-quarter income on robust demand for Kate Spade luggage, sending its shares up almost 5 %.
Kate Spade’s colourful, quirky luggage and satchels have been successful with millennials, serving to Tapestry broaden the attain of its handbag enterprise that has historically catered to older girls.
Analysts say the publicity across the surprising death of Kate Spade, the designer behind the enduring model, in early June might have helped sales. The corporate purchased the model final yr.
“In its first yr inside Tapestry, Kate Spade delivered double digit earnings per share accretion, regardless of the strategic pullback in on-line flash and wholesale disposition,” Tapestry Chief Government Officer Victor Luis mentioned.
Tapestry has been pulling again flash sales promotions on Kate Spade’s web site and limiting inventories at department shops to promote extra gadgets at full worth, a method that helped revive sales of its signature Coach model.
Within the fourth quarter, Kate Spade’s comparable-store sales and income topped estimates, serving to total sales beat the typical analyst estimate.
For the complete yr, Tapestry forecast sales within the vary of $6.1 billion to $6.2 billion for fiscal 2019, beating the typical analyst estimate of $6.08 billion, in accordance with Thomson Reuters I/B/E/S. It forecast revenue of $2.70 to $2.80 per share for the yr, barely under the typical estimate of $2.82 per share.
In keeping with Cowen analyst Oliver Chen, Tapestry has guided under expectations for the previous three years, making this its first sales forecast that got here in above estimates.
Rivals Michael Kors Holdings and Ralph Lauren have raised their full-year earnings forecast, signaling a restoration for reasonably priced luxurious manufacturers.
Internet revenue rose almost 40 % to $211.7 million, or 73 cents per share, within the fourth quarter ended June 30.
Excluding one time gadgets, the style home reported a revenue of 60 cents, three cents greater than the polled estimate.
Internet sales rose 31 % to $1.48 billion, edging previous the typical estimate of $1.47 billion.