The US fashion group Tapestry Inc. was able to increase its sales to a new record in the first quarter of the 2023/24 financial year. Net profit, however, stagnated.
On Thursday, the parent company of the Coach, Kate Spade and Stuart Weitzman brands announced that it achieved sales of around 1.51 billion US dollars (1.42 billion euros) in the quarter ended at the end of September. Revenues rose by 0.4 percent compared to the same period last year (currency-adjusted +2 percent) and reached a new high in the company’s history.
The group owed the small increase to its core brand Coach, whose sales increased by three percent (currency-adjusted +5 percent) to 1.16 billion US dollars. Kate Spade’s revenue, however, fell by six percent (-5 percent at constant currency) to $303.2 million. Stuart Weitzman even had to accept a decline of 19 percent (-18 percent adjusted for currency effects) to 52.6 million US dollars.
Special expenses in the run-up to the planned Capri takeover are impacting earnings
The group was able to increase its gross margin, but also had to record special expenses in connection with the planned takeover of competitor Capri Holdings Limited, which is to be completed over the next calendar year.
Due to these one-time charges, operating profit fell by 0.4 percent to $253.2 million. Adjusted for the corresponding special effects, operating profit rose by 7.3 percent to $272.8 million. Reported net profit in the first quarter was 195.0 million euros (182.4 million euros), slightly below the corresponding previous year’s figure of 195.3 million US dollars (-0.2 percent).
In view of negative currency effects and “more modest” prospects for business development in North America and Asia, the company slightly revised its sales target for the entire financial year downwards. The corresponding forecast was lowered from $6.9 billion to $6.7 billion. Currency-adjusted growth of two to three percent compared to the previous year is now expected, the group explained.
However, the target range for diluted earnings per share remained unchanged and remains at $4.10 to $4.15. Possible sales and earnings contributions from the takeover candidate Capri as well as costs associated with the acquisition are not yet taken into account in the forecasts.