Shares for Tapestry Inc. are soaring in Thursday premarket trading after the upscale fashion company posted stronger-than-anticipated first-quarter earnings.
For the period ended Sept. 26, the Coach, Kate Spade and Stuart Weitzman parent logged adjusted earnings of 58 cents on profits of $161 million, compared with the previous year’s earnings of 40 cents on profits of $114 million. Wall Street had expected earnings of just 23 cents. Revenues declined 14% to $1.17 billion but still topped analysts’ forecasts of $1.07 billion.
As of 8:30 a.m. ET, Tapestry’s stock was up more than 10.3% to $23.52.
In a statement, CEO Joanne Crevoiserat — who was permanently appointed to the post just days ago, succeeding former executive chief Jide Zeitlin — said that the retail group delivered financial results that were materially ahead of management’s expectations.
“We delivered strong profit growth across our portfolio of brands in the face of an unprecedented and challenging backdrop,” she explained. “We drove a meaningful sequential improvement in top-line trends, supported by strength in digital and China.”
The first quarter marked Tapestry’s second consecutive three-month period of triple-digit e-commerce growth versus the prior year. It added nearly 800,000 new customers across its brands in North America through its online channels.
What’s more, the retail group posted double-digit year-over-year revenue growth in Mainland China through “compelling product assortments, enhanced marketing and expanded reach across direct channels and third-party online distribution.”
At Coach, which rakes in the lion’s share of Tapestry’s revenues, sales fell 9% to $875 million. Kate Spade saw a 21% drop in sales to $240 million, while Stuart Weitzman recorded a 35% decline to $56 million.
Still, the company expressed confidence in its turnaround plan, which was introduced in mid-August to help improve the omnichannel experience at Coach, as well as return Kate Spade to a position of strength and restore profitability at Stuart Weitzman.
“Our performance underscores the power of our brands, the agility of our talented teams and the competitive advantage of Tapestry’s enabling platform,” Crevoiserat said.
At the end of the quarter, Tapestry had $1.5 billion in cash and equivalents. While it opted against providing an outlook, the group shared that it “continues to expect a top-line inflection” in the second half of the fiscal year, with both sales and profit growth projected for 2021.
“As we enter the holiday season, our teams continue to focus on the factors within our control. We are putting the consumer first, delivering innovative, relevant and beautifully crafted product, while staying true to the unique purpose of each of our brands,” Crevoiserat added. “We are also leaning into the opportunity to evolve with the changing landscape and shifting consumer needs and preferences. Given the strength of the first quarter, we are increasingly optimistic in our ability to drive sustainable top- and bottom-line growth over our planning horizon.”