Coach-owner Tapestry sales fall 7% in holiday quarter, sees 2021 revenue up by high-single digits

Coach-owner Tapestry said Thursday its sales fell 7% during the holiday quarter as the retailer tries to claw its way back from the losses seen during the pandemic.

The company appeared more optimistic, however, about shopper demand strengthening later this year, but it declined to give a specific earnings forecast.

CEO Joanne Crevoiserat said Tapestry managed to sell more of its bags, including those under the Kate Spade brand, at full price during the holiday season as it decreases its reliance on promotions to lure in shoppers.

Tapestry shares were up more than 3% in midday trading.

Here’s what the company reported for its fiscal second quarter compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $1.15 adjusted vs. $1.01 expected
• Revenue: $1.69 billion vs. $1.63 billion forecast

For the three-month period ending Dec. 26, Tapestry said net income rose by 4.1% to $311 million from $298.8 million a year earlier. Net sales declined by 7% on a year-over-year basis.

Tapestry said its online business grew by triple digits compared with the prior year, with digital sales representing about one-third of global sales and nearly half of revenue in North America.

In mainland China, Tapestry reported year-over-year growth of more than 30%, and the company said it achieved record sales during Alibaba‘s annual 11.11 shopping event in November.

However, sales fell within each of its individual brands during the quarter. Coach revenue slid by 4%, while Kate Spade and Stuart Weitzman sales tumbled by 13% and 27%, respectively.

Tapestry said it expects full-year revenue to climb at a high-single digit rate on a 52-week basis, and around 10% on 53-week basis. Analysts forecast annual sales to grow by 6.9%, according to Refinitiv data. The company did not offer any more details about its outlook, due to the uncertainty tied to the health crisis.

“As we enter the second half of our fiscal year, we are optimistic for the future in spite of the uncertain backdrop,” Crevoiserat said.

A day earlier, rival Capri Holdings struck a similar tone about the future. Like Tapestry, the owner of the Michael Kors and Versace brands managed to sell more bags and shoes at full price during the holidays by maintaining tighter inventories and having fewer discounts. Capri CEO John Idol told analysts the retailer anticipates higher consumer demand in the second half of this year, beginning around September.

Tapestry shares are up more than 32% over the past 12 months. The company has a market cap of $9.9 billion.

Find the full press release from Tapestry here.