Coach owner Tapestry on Thursday reported quarterly results that topped estimates, driven by triple-digit e-commerce growth and a strong rebound in China.
“We are very pleased with our first quarter results, which exceeded expectations,” new CEO Joanne Crevoiserat said in a statement. “Our performance underscores the power of our brands.”
While the company is not offering a specific full-year outlook due to the uncertainty stemming from the coronavirus, it said that given the strong start to fiscal 2021, it is now forecasting revenue and profits will grow for the year. For its fiscal second quarter, Tapestry is calling for a low-double-digit sales decline.
Shares of Tapestry, whose brands also include Kate Spade, surged more than 9% in premarket trading.
Here’s how the retailer did during its fiscal first quarter of 2021, compared with what analysts were expecting, using Refinitiv data:
- Earnings per share: 58 cents, adjusted, vs. 23 cents, expected
- Revenue: $1.17 billion vs. $1.07 billion, expected
For the quarter ended Sept. 26, Tapestry said net income rose to $231.7 million, or 83 cents per share, from $20 million, or 7 cents a share, a year earlier, when Tapestry recorded more than $70 million in impairment charges.
Excluding one-time charges during the latest quarter, Tapestry earned 58 cents per share, outpacing analyst expectations for 23 cents per share, from Refinitiv.
Sales fell just 14% to $1.17 billion from $1.36 billion a year earlier, buoyed by strength online and double-digit revenue growth in mainland China. Despite the declines, revenue topped analyst estimates of $1.07 billion.
Fewer consumers have been stocking up on purses and high-heeled shoes, as many have culled their spending on accessories and apparel during the pandemic.
Coach sales fell 9% from a year earlier to $875.4 million, while Kate Spade sales fell 21% to $240.4 million. Sales of its Stuart Weitzman brand dropped 35% to $56.4 million.
For those people who are shopping, though, many are buying online. Tapestry said it gained nearly 800,000 new customers across its three brands online in North America during the quarter. And this holiday season, it expects e-commerce sales will make up nearly 50% of all North American holiday sales.
Customers are also paying more per handbag, Tapestry said. Its revenue per handbag globally rose more than 25%, on average, during the fiscal first quarter, which consisted of more than 20% growth in North America.
In a bid to boost profitability, the company has also been working to clear out excess merchandise, without using too many promotions. Tapestry said its inventories at the end of the quarter totaled $811 million, compared with $880 million a year earlier.
Earlier this week, the company named Crevoiserat as chief executive officer, effective immediately. She had been serving as interim chief after Jide Zeitlin resigned abruptly in July, amidst an investigation into allegations regarding his personal behavior.
As of Wednesday’s market close, Tapestry shares were down about 21% this year, giving the company a market cap of $5.9 billion.