By Savyata Mishra and Juveria Tabassum
(Reuters) -Coach parent Tapestry, which agreed to buy Capri last week, forecast fiscal 2024 profit and sales below estimates and posted lower-than-expected quarterly results on Thursday, as appetite for its luxury handbags wanes in the United States.
The company also joined luxury rivals Ralph Lauren, LVMH, Gucci-owner Kering and Canada Goose in pointing to a challenging consumer backdrop in North America.
The ‘accessible luxury’ segment has wavered in the recent quarter as Americans’ spending power has been pressured by the increased cost of living and still-high inflation.
“The lower income cohort is under pressure … and is being more choiceful,” CEO Joanne Crevoiserat said on a post-earnings call.
However, Tapestry said it expects to benefit from the recovery in demand from the “highly profitable region” of China this fiscal year.
In the reported quarter, revenues from Kate Spade and Stuart Weitzman dropped 10% and 13% over the last year, respectively. TD Cowen analyst Oliver Chen attributed the slowness at Kate Spade partly to its higher exposure to North America.
Last week, Tapestry said it would buy rival and Michael Kors owner Capri in a deal valued at $8.5 billion, in a bid to challenge larger European rivals for a bigger share of the global luxury market.
Tapestry expects adjusted earnings in the range of $4.10 to $4.15 per share in fiscal 2024, compared to Refinitiv IBES estimates of $4.24.
Tapestry’s fiscal 2024 net sales forecast was a touch shy of analysts’ estimates.
The company’s adjusted per share was 78 cents in the fourth quarter ended July 1, missing analysts’ estimate of 97 cents.
“With more growth coming from overseas, Tapestry’s profitability was hurt somewhat by the strong dollar – an issue that continues to affect many U.S.-based brands and retailers,” Insider Intelligence analyst Rachel Wolff said.
Shares of the company were marginally down in volatile trading.
(Reporting by Savyata Mishra and Juveria Tabassum in Bengaluru; Editing by Maju Samuel)
Brought to you by www.srnnews.com
