Coach parent Tapestry raised its annual profit forecast on Thursday, betting on full-price sales of its premium handbags and early signs of a demand recovery in key market China.
Sentiment has improved in Greater China since the Covid-related impact, echoing trends seen at luxury retailers Ralph Lauren, Canada Goose, and Christian Dior owner LVMH.
After a softer start to the year owing to cautious spending in North America, Tapestry saw its sales jump 19 per cent in China and 11 per cent in Europe in the second quarter.
“We’ve continued to see an uptick in travel spend from Mainland China tourists, with increases across Asia and Europe,” CFO Scott Roe said. Ralph Lauren also posted upbeat quarterly results.
“Personal luxury sales in China are expected to grow as affluent consumers continue to open their wallets – a trend which should enable Tapestry to retain its momentum in the country,” Insider Intelligence analyst Rachel Wolff said.
Second-quarter revenue at Tapestry’s Coach brand rose 6 per cent, as sales of its Tabby handbags nearly doubled over last year. This offset declines in its Kate Spade and Stuart Weitzman brands. CEO Joanne Crevoiserat on a post-earnings call indicated plans for further pricing improvements this year.
Tapestry’s net sales rose to US $ 2.08 billion in the quarter ended 31st December, above LSEG estimate of US $ 2.06 billion. Easing freight costs helped margins expand by 300 basis points.
