The US fashion group Tapestry Inc. started the 2022/23 financial year with record sales. Although profit in the first quarter fell short of the corresponding prior-year level, it was able to exceed market expectations. Due to the current exchange rate developments, the company lowered its earnings forecast on Thursday.
In the first quarter, which ended on October 1, group sales reached a new record level of 1.51 billion US dollars (1.51 billion euros). This corresponded to an increase of 1.7 percent (currency-adjusted +5 percent) compared to the same period of the previous year. Coach brand revenue grew 0.4 percent (+4 percent currency adjusted) to 1.12 billion euros, while Kate Spade grew 7.5 percent (+10 percent currency adjusted) to $321.9 million. The shoe label Stuart Weitzman had to accept a drop in sales of 1.8 percent to 65.3 million US dollars. Adjusted for exchange rate changes, its revenues remained more or less constant.
However, cost increases and negative currency effects ensured that profits remained below the level of the same quarter of the previous year. Operating income fell 14.0 percent to $254.3 million, and net income for the quarter shrank 13.9 percent to $195.3 million. Analysts had previously expected a more significant decline.
The company cut its earnings guidance for the full fiscal year due to the continued strength of the US dollar. Management now only expects diluted earnings per share to be between $3.60 and $3.70. Previously, $3.80 to $3.90 had been targeted.