The US fashion group Tapestry Inc. closed the third quarter of 2021/22 with surprisingly strong figures. However, the parent company of the Coach, Kate Spade and Stuart Weitzman brands had to lower its profit forecast for the full year. On Thursday, the company cited the effects of the tightened corona restrictions in China as justification.
For the third quarter ended April 2, Group sales were $1.48 billion, up 13 percent year-on-year. Growth drivers were above-average improvements in North America (+22 percent) and in global online business (+20 percent). In mainland China, however, revenue fell by a mid-teens percentage as a result of the Covid-19 pandemic.
Although higher freight and marketing expenses slowed earnings, operating income rose 45 percent to $169.5 million. Reported net income for the quarter was $122.7 million (EUR 117.9 million), up 34 percent year-on-year. However, adjusted for special effects, net profit fell by six percent because high value adjustments had to be made last year.
Despite the better-than-expected sales and earnings development for the quarter, management lowered its earnings guidance for the full year to expected diluted earnings per share in the range of $3.45, down from a range of $3.60 to $3.65. dollars had been expected. The group cited the “headwind” as a result of the corona situation in China as justification. The company put the resulting burden on earnings at between 0.25 and 0.30 US dollars per share. The revenue target was modified from $6.75 to “about $6.7 billion.” That would represent growth of a percentage in the high teens over the prior year.