Luxury accessories maker Tapestry forecast full-year profit and sales below estimates as demand for its Coach, Kate Spade and Stuart Weitzman brands weakens in the key North American market.
The company, which agreed to purchase Michael Kors owner Capri Holdings last week, expects adjusted earnings of $4.10 to $4.15 per share for fiscal 2024 compared to the $4.24 consensus estimate. Tapestry sees net sales approaching $6.9 billion, versus analysts' view of $6.93 billion.
Tapestry reported fourth-quarter adjusted earnings per share of 78 cents, missing estimates of 97 cents, with sales impacted by the strong U.S. dollar. Revenues declined across its brands, falling 10% for Kate Spade and 13% at Stuart Weitzman on an annual basis.
While demand recovered solidly in China, the upside was partly offset by softening consumer spending in North America amid high inflation and cost of living increases. Rivals such as Ralph Lauren, LVMH, Kering and Canada Goose have also faced consumer pressures in the key U.S. market.
Analysts say Tapestry's profitability took a hit from currency headwinds as more of its growth comes from international operations. The company is challenging larger European luxury groups with its pending Capri acquisition but macroeconomic uncertainties continue to weigh on near-term forecasts.
