NEW YORK (AP) — A strong performance at Coach powered the results at its parent company Tapestry, but a weak showing from its Stuart Weitzman shoe brand and its Kate Spade business dragged shares of the company down sharply in midday trading.
The news comes as Tapestry is aiming to create a global house of powerful brands and rely less on discounting to lure shoppers. Management has been turning around the Coach brand by overhauling its design and scaling back on discounting. The company is now focusing on revving up Kate Spade's business by deliberately pulling back on wholesale distribution and flash sales sites, which have sullied the label.
For the fiscal third quarter ended March 31, Tapestry Inc. earned $140.3 million, or 48 cents per share. A year ago the New York company earned $122.2 million, or 43 cents per share.
Earnings, adjusted for costs related to mergers and acquisitions and pretax expenses, came to 54 cents per share. That's better than the 50 cents per share analysts polled by Zacks Investment Research were calling for.
Revenue surged to $1.32 billion from $995.2 million, buoyed partly by the acquisition of Kate Spade and increased sales for Coach products. Analysts polled by Zacks predicted $1.3 billion in revenue.
While revenue at Stuart Weitzman improved during the quarter, the company said that the segment's performance was hurt by production delays and lower sell-through of key carryover styles.
Kate Spade's global sales at stores opened at least a year fell 9 percent during the quarter.
Coach enjoyed a 3 percent increase in global sales at stores opened at least a year.
Tapestry now expects full-year earnings to be $2.57 to $2.60 per share, revised from its prior guidance for earnings of $2.52 to $2.60 per share. It still anticipates revenue in a range of $5.8 billion to $5.9 billion. Analysts surveyed by FactSet expect earnings of $2.59 per share on revenue of $5.86 billion.
Shares tumbled nearly 13 percent, or $6.79 to $46.98 in midday trading Tuesday.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on TPR at https://www.zacks.com/ap/TPR
Automated Insights, source Associated Press News