Luxury fashion group Tapestry has upped its full-year profit guidance after reporting record earnings in the second quarter.
The New York-based group, which owns brands Coach, Kate Spade, and Stuart Weitzman, said it now expects earnings per diluted share (EPS) of between 3.70 dollars and 3.75 dollars, up from previous guidance of between 3.60 dollars and 3.70 dollars.
The group said it expects full-year revenue of approximately 6.6 billion dollars.
It said the updated guidance was a result of better-than-expected Q2 earnings and “favorability associated with a more moderate currency headwind than previously anticipated”.
Tapestry made a net income of 330 million dollars in the quarter, up from 318 million dollars a year earlier.
However, the group reported a 5 percent drop in net sales to 2.03 billion dollars.
Highlights for the group in the quarter included an increase in spend per customer; the acquisition of nearly 2.6 million new customers in North America; and North America revenue in-line with expectations with a stronger-than-anticipated operating margin.
Mainland China impacts Q2, but trends improving
In Mainland China, however, the group reported a 20 percent decrease in constant-currency revenue as the region continued to be impacted by Covid restrictions. However, it added that there has been “a significant sequential improvement in traffic and revenue trends” in the third quarter.
The group also achieved double-digit sales increases at constant currency in the rest of Asia, Japan, and Europe, which together outperformed expectations.
CEO Joanne Crevoiserat hailed the results as the group outperformed expectations in the important holiday season.
“To this end, we delivered record second quarter earnings despite a challenging backdrop,” she told investors.
She continued: “This is a direct reflection of our talented teams and the benefits of our globally diversified business model, which continue to fuel innovation and customer engagement across our portfolio.
“Importantly, we remained disciplined stewards of our brands, expanding gross margin, while making investments that support our strategic growth agenda.”