Coach parent Tapestry Inc (NYSE:TPR) stock was on the back foot in Thursday’s premarket, reporting its fourth-quarter earnings slightly light of market expectations.
It comes against a more challenging backdrop for luxury brands, albeit Tapestry remains bullish enough in the sector to last week agree the acquisition of Michael Kors and Jimmy Choo owner Capri in an US$8.5 billion deal.
Today, Tapestry reported US$1.62 billion of quarterly revenue versus Wall Street forecasts for US$1.65 billion.
Earnings meanwhile came in at 95 cents per share, shy of the 97 cents that market analysts predicted.
Across its brands, Tapestry said Coach saw an uptick in sales to US$1.25 billion whilst both Kate Spade and Stuart Weitzman units saw a decline in sales year-on-year.
It comes in a market where the likes of Ralph Lauren, LVMH, and Gucci are also seeing weaker demand, as inflation and the squeeze on living costs eke into the higher income and luxury brackets.
Giving its outlook for the new financial year (excluding any contribution from Capri), the designer brands group pitches revenue guidance at around US$6.9 billion, while earnings are guided at US$4.10 to US$4.15 per share – below the prior Wall Street consensus of US$4.22.
“Building on our strong foundation, we are focused on the future,” said chief executive Joanne Crevoiserat.
“We remain steadfast in our commitment to deliver revenue and profit gains across our current portfolio where our runway is significant.
“Further, last week, we announced that we entered into a definitive agreement to acquire Capri Holdings Limited, establishing a new powerful global house of luxury and fashion brands that expands our portfolio reach across consumer segments, geographies, and product categories.
She added: “Importantly, the acquisition is expected to be immediately accretive to adjusted earnings and support enhanced cash flow and financial returns.
“By bringing together six iconic brands with a heritage in design and craftsmanship, and leveraging our modern consumer engagement platform, we will drive greater innovation, consumer connectivity, and cultural relevance, creating superior value for our consumers, employees, communities, and shareholders around the world.”
In New York, Tapestry stock was trading 43 cents or 1.25% lower in premarket dealing, changing hands at US$33.90 per share.