Tapestry, the parent company of luxury brands Coach, Kate Spade, and Stuart Weitzman, experienced a decline in stock prices during premarket trading following the release of disappointing fourth-quarter financial results and a weaker outlook.
Disappointing Earnings and Revenue
Although Tapestry’s fourth-quarter earnings per share increased compared to the same period last year, it fell short of Wall Street’s forecast of 97 cents, coming in at 95 cents. Additionally, the company reported revenue of $1.62 billion, lower than the expected $1.65 billion. Among its brands, Coach contributed $1.25 billion in net sales, Kate Spade generated $309.5 million, and Stuart Weitzman brought in $62.6 million. While Coach experienced a rise in net sales from the previous year, Kate Spade and Stuart Weitzman saw a decline.
Looking Ahead
CEO Joanne Crevoiserat expressed confidence in Tapestry’s future prospects, stating that the company remains focused on delivering revenue and profit growth across its existing portfolio. However, the weak financial results have raised concerns among investors.
Acquisition Announcement
Recent news reveals that Tapestry is set to acquire Capri Holdings, the owner of renowned fashion brands Versace, Michael Kors, and Jimmy Choo, in a deal worth $8.5 billion. This acquisition is expected to further enhance Tapestry’s position in the luxury fashion market.
Fiscal Year 2024 Guidance
Tapestry provided non-GAAP guidance for fiscal year 2024, anticipating revenue of approximately $6.9 billion, aligning with analysts’ estimates. However, the projected earnings range of $4.10 to $4.15 per share is slightly below analysts’ anticipated $4.22 per share. It’s important to note that these forecasts do not include the contribution of revenue or earnings from the proposed Capri acquisition, which is expected to be completed in calendar year 2024.
Stock Price Impact
As a result of the disappointing financial results and weaker-than-expected outlook, Tapestry’s stock price dropped by 2.7% to $33.41 during premarket trading.