Tapestry beats revenue, profit estimates on steady demand for Coach handbags

(Reuters) -Coach parent Tapestry (NYSE:TPR ) beat Wall Street expectations for fourth-quarter results on robust demand for its popular Tabby handbags, signaling resilient interest for affordable luxury goods despite a global spending slowdown.

The company's shares rose 8% in premarket trading on Thursday.

Demand for trendy high-end bags, apparel, and accessories from higher-income shoppers has held up for a few luxury companies as spending tempers after a recent jump.

Tapestry reported net sales of $1.59 billion for the three-month ended June 29, topping analysts' estimates of $1.57 billion, according to LSEG data.

Excluding items, earnings per share of 92 cents also beat expectations of 88 cents.

Tapestry has banked on Tabby shoulder bags from the Coach family to drive more full-price sales at its stores, even as the other two brands under its umbrella, Stuart and Kate Spade, struggle with weak demand in China and the U.S.

Sales at Coach, which accounts for more than 70% of the company's revenue, rose 2% on a constant currency basis.

Gross margin rose 250 basis points, following a 190 basis points rise in the prior quarter.

Meanwhile, the company said it expects to close the Capri deal this year.



In April, the U.S. Federal Trade Commission sued to block Tapestry's $8.5 billion buyout of Michael Kors parent Capri on concerns that a deal would "eliminate" direct competition.

Last week, Capri reported a 12% fall in revenue on a constant currency basis for the first quarter.

Source: Investing.com