With demand for luxury goods returning, U.S. multinational Tapestry, owner of New York fashion chain Coach, expects higher-than-expected earnings.
As handbag maker Coach (Tapestry Inc.) reported better-than-expected results on Thursday, the brand is anticipating the return of demand for luxury goods and expects to beat estimates on its annual revenue and profit.
The U.S. leather goods company is counting on increased vaccination rates and the return of physical events to boost sales of fashion items and handbags. This outlook is driven by the recent rebound in demand for luxury goods.
Indeed, several big names in luxury have posted positive results recently, as is the case with LVMH (Louis Vuitton, Loewe), Kering (Gucci, Saint Laurent), Ralph Lauren, Capri (Michael Kors).
However, the common prosperity plan launched by China, the world’s largest luxury goods market, which includes a redistribution of wealth in the country and targets the most affluent populations, clouds the forecast and threatens the recovery in demand.
“Today, we are in a dynamic where the backdrop of consumer demand is strong, while the supply chain remains challenging. So I want to emphasize the underlying strength … of our business and separate it from the uncertainty of the macroeconomic environment,” said group CFO Scott Roe after the release of the results.
Tapestry is looking at annual sales of nearly $6.4 billion, well above market estimates of $6.08 billion. While analysts estimate annual earnings per share of $3.19, the multinational is betting in the range of $3.30 to $3.35 per share.
For the year 2022, the luxury group is already planning to dedicate $750 million for its shareholders and by restoring its dividend and share buyback program. The company recorded a profit of 74 cents per share, exceeding experts’ forecasts of 69 cents per share.
According to Refinitiv’s IBES data, net sales also exceeded analysts‘ expectations, rising 126% to $1.62 billion in the fourth quarter from the $1.56 billion initially expected.
Finally, after gaining 33% since the beginning of the year, the company’s shares are down 1.4% in the morning, following the market trend.
Read also > CHINA’S WEALTH REDISTRIBUTION PLAN PUSHES DOWN LUXURY
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