Net sales at Tapestry, Inc. totalled 1.44 billion dollars for the third quarter, a 13 percent increase compared to the same quarter in the prior year.

The company is modifying its fiscal 2022 outlook due to an estimated headwind of 25 cents to 30 cents resulting from incremental Covid-related pressure in China and an anticipated negative impact of approximately 17 cents based on the current expectation that the Generalized System of Preferences (‘GSP’) with retroactive benefit will not be adopted in the company’s current fiscal year.

Commenting on the third quarter trading, Joanne Crevoiserat, chief executive officer of Tapestry, Inc., said: “Our third quarter results significantly exceeded expectations led by continued strong growth in North America.”

Highlights of Tapestry’s Q3 results

The company’s gross profit totalled 1.01 billion dollars on both a reported and non-GAAP basis, while gross margin was 69.9 percent.

Operating income was 169 million dollars on a reported basis, while operating margin was 11.8 percent compared to operating income of 117 million dollars and operating margin of 9.2 percent in the prior year.

Net income for the quarter was 123 million dollars on a reported basis, with earnings per diluted share of 46 cents compared to 92 million dollars and earnings per diluted share of 32 cents in the prior year period.

On a non-GAAP basis, net income for the quarter was 136 million dollars with earnings per diluted share of 51 cents. This compared to non-GAAP net income of 145 million dollars with earnings per diluted share of 51 cents in the prior year period.

Tapestry lowers FY22 profit outlook

Excluding the external factors, the company’s projection would have been 25 cents to 30 cents ahead of its prior outlook driven primarily by healthy underlying momentum in the rest of the world, notably North America, and inclusive of a 4 cents contribution from additional share repurchase activity.

The company now expects revenue of approximately 6.7 billion dollars, which represents a high-teens growth rate versus the prior year on a 52-week, comparable basis. Earnings per diluted share are expected to reach 3.45 dollars, up 20 percent versus the prior year on a 52-week, comparable basis.