Coach owner Tapestry has reported widening profit in the fourth quarter despite its sales remaining flat.
The group, which last week announced plans to acquire rival US fashion giant Capri Holdings, made a net profit of 224 million dollars in the three months ended July 1, up from 189 million dollars a year earlier.
Sales in the fourth quarter remained flat at 1.62 billion dollars, with a 3 percent increase at its star label Coach to 1.25 billion dollars offset by a 10 percent fall at Kate Spade to 309.5 million dollars, and a 13 percent drop at Stuart Weitzman to 62.6 million dollars.
For the full year, sales at Tapestry fell slightly to 6.66 billion dollars compared to 6.68 billion dollars the prior year. It had previously expected sales to hit 6.7 billion dollars.
Net profit for the year widened to 936 million dollars from 856 million dollars, while earnings per diluted share (EPS) increased to 3.88 dollars from 3.17 dollars the prior year. It had expected EPS of between 3.85 dollars and 3.90 dollars.
“We achieved record EPS this fiscal year, reinforcing the power of brand building, consumer-centric strategies, and disciplined execution,” Tapestry CEO Joanne Crevoiserat said in a statement.
Looking ahead, the group expects FY24 revenue to increase by approximately 3 percent to 4 percent to 6.9 billion dollars.
It forecasts earnings per diluted share of between 4.10 dollars and 4.15 dollars, which would represent growth of between 6 percent and 7 percent.
The financial update comes after Tapestry announced last week it would be forming a new US luxury powerhouse by acquiring rival group Capri Holdings in a deal worth approximately 8.5 billion dollars.
That same day, Capri, the parent of luxury labels Michael Kors, Versace, and Jimmy Choo, reported a 9.6 percent drop in first-quarter revenue to 1.23 billion dollars.
Capri’s net profit in the quarter narrowed to 48 million dollars from 201 million dollars the prior year, while adjusted net income fell to 88 million dollars from 215 million dollars.
John D. Idol, the chair and CEO of Capri Holdings, said at the time that the merger “marks a major milestone” for the business.
“We are confident this combination will deliver immediate value to our shareholders,” he said. “It will also provide new opportunities for our dedicated employees around the world as Capri becomes part of a larger and more diversified company.”
Idol said the deal will provide Capri Holdings with “greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands”.